When using the cycle approach to segmenting the audit, the reason for treating capital acquisition and repayment separately from the acquisition of goods and services is that:
A)the transactions are related to financing a company rather than to its operations.
B)most capital acquisition and repayment cycle accounts involve few transactions, but each is often highly material and therefore should be audited extensively.
C)both A and B are correct.
D)neither A nor B is correct.

Question

Quizplus · Accepted Answer

The capital acquisition and repayment cycle is distinct because it deals with financing activities rather than operational activities, and the transactions, while fewer, are often highly material, necessitating thorough auditing.

When Using the Cycle Approach to Segmenting the Audit, the Reason