Final answer:
The statement that the "inventory and warehousing" cycle may be audited at any time during the engagement since it is unrelated to other cycles is not true. The cycle approach ensures all accounts are covered and transactions are not overlooked, with particular cycles often being related and affecting one another.
Step-by-step explanation:
In describing the cycle approach to segmenting an audit, the statement that is not true is that the "inventory and warehousing" cycle may be audited at any time during the engagement since it is unrelated to the other cycles. The cycle approach involves grouping similar types of transactions and related accounts into cycles. Let's look at the provided statements:
All general ledger accounts and journals are included at least once.
- Some journals and general ledger accounts are included in more than one cycle.
- The "capital acquisition and repayment" cycle is closely related to the "acquisition of goods and services and payment" cycle.
- The "inventory and warehousing" cycle may be audited at any time during the engagement since it is unrelated to the other cycles.
The first three statements correctly describe the cycle approach. All general ledger accounts and journals are indeed included at least once in one of the cycles, and it is also true that they can be part of more than one cycle, ensuring that no transaction is overlooked. Moreover, the "capital acquisition and repayment" cycle is indeed closely related to the "acquisition of goods and services and payment" cycle because capital acquisition can affect the ability to procure goods and services.
The incorrect statement here is (D), as the "inventory and warehousing" cycle is indeed related to other cycles, such as those involving sales and purchases. It typically cannot be audited at any time in isolation, as changes in inventory levels can impact various aspects of the financial statements. Proper timing and consideration of other cycles are necessary for a comprehensive audit.