Which of the following accounts would most likely be reviewed by the auditor to gain reasonable assurance that additions to the equipment account are not understated?

• A. Repairs and maintenance expense.
• B. Depreciation expense.
• C. Gain on disposal of equipment.
• D. Accounts payable.

Answer: (D)

To ensure additions to the equipment account are complete, the auditor focuses on evidence that new purchases are properly supported and recorded. When equipment is bought, there is typically a vendor invoice and an obligation to pay, which appears in accounts payable. By reviewing accounts payable and the related invoices, the auditor can detect whether equipment purchases are being captured in the fixed asset records or potentially left out or misclassified. Tracing between supplier obligations and the asset additions helps confirm that capital expenditures are recorded as assets rather than being expensed or omitted.

Repairs and maintenance are usually expensed and don’t represent capital additions; depreciation reflects only how existing assets are allocated over time; gains on disposal relate to disposed assets. These do not provide the same linkage between purchases and asset additions that accounts payable does.