Question

Under the cycle approach to segmenting an audit, transactions recorded in different journals should

never be combined with the general ledger balances that r esult from those transactions.
A) True
B) False

Answer 1

The statement is false; transactions recorded in different journals are often combined with the general ledger balances, which is a common practice in the cycle approach to auditing.

Step-by-step explanation:

The statement that transactions recorded in different journals should never be combined with the general ledger balances that result from those transactions is false. In the cycle approach to auditing, transactions are often categorized into different cycles, such as the sales cycle, purchase cycle, and payroll cycle, among others. Each of these cycles will contain both journal entries for transactions and the resulting general ledger balances. Auditors look at these cycles to see if the transactions were recorded accurately and if they correspond correctly to the general ledger balances, thereby ensuring the integrity of the financial statements as a whole.