C is corrent because the repairs expense account may include additions that have been erroneously expensed. Thus, the auditor’s review of the repairs account would reveal a possible understatement of additions to property, plant, and equipment.
A is incorrect because it is unlikely that depreciation will be taken on assets which have not been capitalized.
B is incorrect because most entries to cash will be for payment of accounts payable which have already been established. Thus, the auditor would not gain assurance regarding additions to property, plant, and equipment.
D is incorrect because even if the item has been set up in accounts payable, it may not have been capitalized properly; the debit portion of the entry may be in the repairs expense account.
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