Which of the following best describes the reason that the auditors record their inventory
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Chapter 12 - Inventories and Cost of Goods Sold Chapter 12 Inventories and Cost of Goods Sold True / False Questions 1. Observation of inventories is a generally accepted auditing standard. True False 2. The receiving department should accept only goods for which there is an approved purchase order on hand. True False 3. For good internal control over purchase transactions, purchases should be made from approved vendors by the department needing the goods. True False 4. Auditors should not review the client's planning of the physical inventory. True False 5. The proper cutoff of inventories is best achieved when the client uses prenumbered purchase orders. True False 6. The lower of cost or market test by the auditors is generally designed to assure that inventories are not valued above their net realizable values. True False 7. When the auditors cannot satisfy themselves as to the accuracy of ending inventory and a material misstatement may exist, they normally may still give an unqualified opinion on the client's income statement. True False 12-1
Which of the following best describes the reason that the auditors record their inventory test counts?Which of the following best describes the reason that the auditors record their inventory test counts in the working papers? For subsequent comparison with the completed inventory listing.
Why the audit of inventory is important to auditors?Inventory audits can help you calculate accurate profits, as the accuracy of your inventory accounting informs your bottom line. Tracking and accounting for changes in the value of inventory over time as it relates to manufacturing and costs of goods sold can drastically impact your accounting records.
Which of the following best describes the reason for the auditors review of the client's cost accounting system?Which of the following best describes the reason for the auditors' review of the client's cost accounting system? To obtain evidence about the valuation of work-in-process, finished goods, and cost of goods sold.
What are the objectives of audit over inventory?The purpose of an inventory audit is to ensure accuracy between actual stock quantity and your financial records. Regular inventory audits increase understanding of your stock flow, help you calculate profits and losses accurately, and keep your business running smoothly.
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