Which one of the following ratio and trend analysis procedures might identify a possible misstatement of expensing amounts that should be capital items?
A) Compare 'monthly or annual repairs and maintenance, supplies expense, small tools expense and similar accounts' with previous years'.
B) Compare 'gross property, plant and cost divided by some method of production' with previous years'.
C) Compare 'depreciation expense divided by gross property, plant and equipment cost' with previous years'.
D) Compare 'accumulated depreciation divided by gross property, plant and equipment cost' with previous years'.

Question

Quizplus · Accepted Answer

Comparing expenses like repairs and maintenance with previous years can help identify unusual increases that might indicate capital items being incorrectly expensed.

Which One of the Following Ratio and Trend Analysis Procedures