Question

An auditor analyzes repairs and maintenance primarily to obtain evidence in support of the assertion that all:

1) non-capitalizable expenditures have been recorded.
2) expenditures for property and equipment have not been charged to expense.
3) non-capitalizable expenditures for repairs and maintenance have been recorded in the proper period.
4) expenditures for property and equipment have been recorded in the proper period.

Answer 1

An auditor analyzes repairs and maintenance primarily to obtain evidence in support of the proper recording of non-capitalizable expenditures and expenses for repairs and maintenance.

Step-by-step explanation:

An auditor analyzes repairs and maintenance primarily to obtain evidence in support of the assertion that all non-capitalizable expenditures have been recorded, and that non-capitalizable expenditures for repairs and maintenance have been recorded in the proper period.

The primary purpose of analyzing repairs and maintenance is to ensure that non-capitalizable expenses have been properly recorded as expenses and charged to the appropriate accounting period. This helps maintain accurate financial statements and ensures compliance with accounting principles.

For example, if a company spends money on repairing a machine, it should be recorded as a repair expense and not capitalized as an asset. The auditor will analyze the repairs and maintenance transactions to verify that the company has appropriately classified and recorded these expenses.