Author Question: The chart of accounts classifies the accounts to make identification of the accounts easier. ... (Read 190 times)

joblessjake · **on:** Jul 5, 2018

The chart of accounts classifies the accounts to make identification of the accounts easier. Describe the numberingsystem businesses use in setting up the chart of accounts.

Question 2

Which of the following categories is not a threat to an auditor's independence?

A. The auditor has done the work that is being audited.
B. The auditor lacks any vested interest in the results of the audit.
C. The auditor has become too close to the audited organization over time.
D. The auditor makes management decisions.

Ksanderson1296 · **Reply #1 on:** Jul 5, 2018

Answer to Question 1

A chart of accounts is set up by assigning 2-digit numbers to each of the accountsfor use as references. The first digit indicates the major account group of theledger in which the account is located. Accounts beginning with 1 representassets; 2, liabilities; 3, owner's equity; 4, revenue; 5, expenses. The second digitindicates the location of the account within its group. Large companies may haveadditional digits to accommodate a large number of accounts.

Answer to Question 2

B