Which of the following statements is NOT true about the cycle approach to segmenting an audit?
A) All general ledger accounts and journals are included at least once.
B) The 'inventory and warehousing' cycle may be audited at any time during the engagement since it is unrelated to the other cycles.
C) The 'capital acquisition and repayment' cycle is closely related to the 'acquisition of goods and services and payment' cycle.
D) Some journals and general ledger accounts are included in more than one cycle.

Question

Quizplus · Accepted Answer

The 'inventory and warehousing' cycle is not unrelated to the other cycles and should be audited at a specific point in the engagement. It is most closely related to the 'acquisition of goods and services and payment' cycle because inventory transactions often involve purchasing and paying for goods. Therefore, statement B is not true.

Which of the Following Statements Is NOT True About the Cycle