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d. Which of the following accounts should be reviewed by the auditors to gain reasonable
assurance that additions to property, plant, and equipment are not understated? (1) Depreciation.
(2) Accounts Payable. (3) Cash. (4) Repairs.
Solution
Correct Answer (4) Repairs
Reason
Sometimes there may be errors in analyzing the type of transaction as to whether it is of capital
nature or revenue nature. An amount which is required to be added to assets accounts and by
mistake is debited to repairs will understate the value of property, plant, and equipment. The
Repairs accounts need to be scrutinized properly and every debits must be checked to see
whether they are appropriate or not.

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  • 1. d. Which of the following accounts should be reviewed by the auditors to gain reasonable assurance that additions to property, plant, and equipment are not understated? (1) Depreciation. (2) Accounts Payable. (3) Cash. (4) Repairs. Solution Correct Answer (4) Repairs Reason Sometimes there may be errors in analyzing the type of transaction as to whether it is of capital nature or revenue nature. An amount which is required to be added to assets accounts and by mistake is debited to repairs will understate the value of property, plant, and equipment. The Repairs accounts need to be scrutinized properly and every debits must be checked to see whether they are appropriate or not.