Question 1

The physical observation procedures for inventory are principally designed to audit for the balance assertions of _______ , _______ , and _______ .

Accepted Answer

[existence, completeness, valuation]

Question 2

To gain assurance that all inventory items in a client's inventory listing schedule are valid, an auditor most likely would trace

Accepted Answer

A) inventory tags noted during the auditor's observation to items in the inventory listing schedule. 
B) inventory tags noted during the auditor's observation to items listed in receiving reports and vendors' invoices. 
C) items in the inventory listing schedule to inventory tags and the auditor's recorded count sheets. 
D) items in receiving reports and vendors' invoices to the inventory listing schedule. 
A) inventory tags noted during the auditor's observation to items in the inventory listing schedule. 
B) inventory tags noted during the auditor's observation to items listed in receiving reports and vendors' invoices. 
C) items in the inventory listing schedule to inventory tags and the auditor's recorded count sheets. 
D) items in receiving reports and vendors' invoices to the inventory listing schedule. C

Question 3

The audit procedures used in an observation of the client's physical inventory taking are designed primarily to

Accepted Answer

A) test and observe the client's physical count of inventory. 
B) verify independently the physical counts obtained by the client. 
C) assist the client in taking test counts of year-end inventory. 
D) determine whether inventory contains obsolete goods. 
A) test and observe the client's physical count of inventory. 
B) verify independently the physical counts obtained by the client. 
C) assist the client in taking test counts of year-end inventory. 
D) determine whether inventory contains obsolete goods. A

Question 4

Which of the following steps would not normally be included in a program for a physical inventory observation?

Accepted Answer

A) Vouch unit prices to vendors' invoices or other cost records. 
B) Obtain the client's inventory counting instructions and review them for completeness. 
C) Inspect the tags used and unused and record the tag numbers used. 
D) Obtain the numbers of the last five receiving reports and last five shipping documents. 
A) Vouch unit prices to vendors' invoices or other cost records. 
B) Obtain the client's inventory counting instructions and review them for completeness. 
C) Inspect the tags used and unused and record the tag numbers used. 
D) Obtain the numbers of the last five receiving reports and last five shipping documents.

Question 5

An auditor reviews job cost sheets to test which transaction assertion?

Accepted Answer

A) Occurrence. 
B) Completeness. 
C) Accuracy. 
D) Classification. 
A) Occurrence. 
B) Completeness. 
C) Accuracy. 
D) Classification.

Question 6

Auditors _______ the inventory taking and make _______ , but they seldom _______ the entire inventory.

Accepted Answer

[observe,

Question 7

Production planning interacts with the preparation of _______.

Accepted Answer

The answer of Production planning interacts with the preparation of...

Question 8

When testing a company's cost accounting system, the auditor uses procedures that are primarily designed to determine that

Accepted Answer

A) quantities on hand have been computed based on acceptable cost accounting techniques that reasonably approximate actual quantities on hand. 
B) physical inventories agree substantially with book inventories. 
C) the system is in accordance with generally accepted accounting principles and is functioning as planned. 
D) costs have been properly assigned to finished goods, work-in-process, and cost of goods sold. 
A) quantities on hand have been computed based on acceptable cost accounting techniques that reasonably approximate actual quantities on hand. 
B) physical inventories agree substantially with book inventories. 
C) the system is in accordance with generally accepted accounting principles and is functioning as planned. 
D) costs have been properly assigned to finished goods, work-in-process, and cost of goods sold.

Question 9

Match between columns
                        Premises: Test counted inventory and traced the count to the perpetual inventory record.
Selected a sample of inventory items from the perpetual records and vouch additions to receiving reports.
Reviewed a sample of vendor invoices for prices paid for inventory.
Review inventory footnote for the financial statements.
Reviewed vendor invoices and purchase orders for terms of the contract.

Accepted Answer

The Answer of Existence. and Rights and obligations. and Completeness. is...

Question 10

An auditor's observation procedures for inventory may be performed during or after the end of the period under audit under which of the following conditions?

Accepted Answer

A) When the client maintains periodic inventory records. 
B) When the auditor finds minimal variations in client records and test counts in prior periods. 
C) When total inventory has not varied more than 5% in the last five years. 
D) When well-kept perpetual inventory records are checked by the client periodically by comparisons with physical counts. 
A) When the client maintains periodic inventory records. 
B) When the auditor finds minimal variations in client records and test counts in prior periods. 
C) When total inventory has not varied more than 5% in the last five years. 
D) When well-kept perpetual inventory records are checked by the client periodically by comparisons with physical counts.

Question 11

Which of the following is the assertion with the highest inherent risk in auditing inventory?

Accepted Answer

A) Completeness. 
B) Rights. 
C) Existence. 
D) Properly classification on the balance sheet. 
A) Completeness. 
B) Rights. 
C) Existence. 
D) Properly classification on the balance sheet.

Question 12

Match between columns
                        Premises: Trace a sample of sales invoices to perpetual inventory record entry of issue.
Select a sample of inventory item from perpetual records and vouch additions to receiving reports.
Select a sample of shipping documents and review the accounting summary of the quantities and prices.
Trace posting of sample of sales invoices to amounts in general ledger.
Review the appropriateness of standard costs to price inventory issues and cost of goods sold.

Accepted Answer

The Answer of Existence. and Rights. and Completeness. and Valuation. is...

Question 13

Mary Monitor, CPA, noted that ABC Co. received goods prior to year-end that were included in physical inventory but had not been recorded. In this case, which of the following adjustments should be made?

Accepted Answer

A) Debit purchases/credit cost of goods sold. 
B) Debit cost of goods sold/credit accounts payable. 
C) Debit inventory/credit accounts payable. 
D) None. 
A) Debit purchases/credit cost of goods sold. 
B) Debit cost of goods sold/credit accounts payable. 
C) Debit inventory/credit accounts payable. 
D) None.

Question 14

Which of the following is not an acceptable method of determining inventory cost under GAAP?

Accepted Answer

A) FIFO. 
B) LIFO. 
C) Average cost. 
D) All of the choices are acceptable. 
A) FIFO. 
B) LIFO. 
C) Average cost. 
D) All of the choices are acceptable.

Question 15

To make a year-to-year comparison of inventory turnover most meaningful, the auditor will perform the analysis

Accepted Answer

A) for the company as a whole. 
B) by division. 
C) by product. 
D) All of the choices are correct. 
A) for the company as a whole. 
B) by division. 
C) by product. 
D) All of the choices are correct.

Question 16

The auditors of Mikel's Shops obtained the following information when performing cutoff testing procedures during their observation of Mikel's physical inventory count at December 31, 2020:
 $\begin{array}{lcccc}
\text { Bill of Lading Number }&1235&1236&1237&1238\
\text { Date } & 12 / 31 / 20 & 12 / 31 / 20 & 1 / 2 / 20 & 1 / 2 / 20 \
\text { Sales price } & \$ 12,000 & \$ 4,500 & \$ 18,000 & \$ 16,000 \
\text { Cost of goods } & \$ 9,000 & \$ 3,000 & \$ 12,000 & \$ 12,000
\end{array}$ When comparing the cutoff information to the sales records, the auditors found that all these shipments were recorded as 2020 sales. The goods shipped on bills of lading 1235 and 1236 were not counted in the inventory, but the goods on bill of lading 1237 and 1238 were included.Required:Prepare the appropriate journal entry to correct the cutoff error. (If no entry is required for a transaction/event, select "No journal entry required")

Accepted Answer

None

Question 17

When evaluating inventory controls, an auditor would be least likely to

Accepted Answer

A) inspect documents. 
B) make inquiries. 
C) observe procedures. 
D) consider policy and procedure manuals. 
A) inspect documents. 
B) make inquiries. 
C) observe procedures. 
D) consider policy and procedure manuals.

Question 18

Inventory count tags are controlled

Accepted Answer

A) to prevent counting errors. 
B) to test cutoff. 
C) to prevent subsequent addition of goods to the inventory. 
D) for reasons specified in all of the choices. 
A) to prevent counting errors. 
B) to test cutoff. 
C) to prevent subsequent addition of goods to the inventory. 
D) for reasons specified in all of the choices.

Question 19

An auditor will usually trace the details of the test counts made during the observation of physical inventory counts to a final inventory compilation. This audit procedure is undertaken to provide evidence that items physically present and observed by the auditor at the time of the physical inventory count are

Accepted Answer

A) owned by the client. 
B) not obsolete. 
C) physically present at the time of the preparation of the final inventory schedule. 
D) included in the final inventory schedule. 
A) owned by the client. 
B) not obsolete. 
C) physically present at the time of the preparation of the final inventory schedule. 
D) included in the final inventory schedule.

Question 20

Which of the following methods for determining inventory cost is not allowed by GAAP?

Accepted Answer

A) Average cost. 
B) FIFO. 
C) LIFO. 
D) Standard cost. 
A) Average cost. 
B) FIFO. 
C) LIFO. 
D) Standard cost.

The physical observation procedures for inventory are principally designed to audit for the balance assertions of ___ , _ , and _____ .

To gain assurance that all inventory items in a client's inventory listing schedule are valid, an auditor most likely would trace

The audit procedures used in an observation of the client's physical inventory taking are designed primarily to

Which of the following steps would not normally be included in a program for a physical inventory observation?

An auditor reviews job cost sheets to test which transaction assertion?

Auditors ___ the inventory taking and make _ , but they seldom _____ the entire inventory.

Production planning interacts with the preparation of _______.

When testing a company's cost accounting system, the auditor uses procedures that are primarily designed to determine that

An auditor's observation procedures for inventory may be performed during or after the end of the period under audit under which of the following conditions?

Which of the following is the assertion with the highest inherent risk in auditing inventory?

Mary Monitor, CPA, noted that ABC Co. received goods prior to year-end that were included in physical inventory but had not been recorded. In this case, which of the following adjustments should be made?

Which of the following is not an acceptable method of determining inventory cost under GAAP?

To make a year-to-year comparison of inventory turnover most meaningful, the auditor will perform the analysis

When evaluating inventory controls, an auditor would be least likely to

Inventory count tags are controlled

Which of the following methods for determining inventory cost is not allowed by GAAP?

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash 227

Revenue and Collection Cycle 279

Acquisition and Expenditure Cycle 336

Finance and Investment Cycle 443

Completing the Audit 500

Reports on Audited Financial Statements

Filters

Exam 9: Production Cycle 394

The physical observation procedures for inventory are principally designed to audit for the balance assertions of _______ , _______ , and _______ .

To gain assurance that all inventory items in a client's inventory listing schedule are valid, an auditor most likely would trace

The audit procedures used in an observation of the client's physical inventory taking are designed primarily to

Which of the following steps would not normally be included in a program for a physical inventory observation?

An auditor reviews job cost sheets to test which transaction assertion?

Auditors _______ the inventory taking and make _______ , but they seldom _______ the entire inventory.

Production planning interacts with the preparation of _______.

When testing a company's cost accounting system, the auditor uses procedures that are primarily designed to determine that

An auditor's observation procedures for inventory may be performed during or after the end of the period under audit under which of the following conditions?

Which of the following is the assertion with the highest inherent risk in auditing inventory?

Mary Monitor, CPA, noted that ABC Co. received goods prior to year-end that were included in physical inventory but had not been recorded. In this case, which of the following adjustments should be made?

Which of the following is not an acceptable method of determining inventory cost under GAAP?

To make a year-to-year comparison of inventory turnover most meaningful, the auditor will perform the analysis

When evaluating inventory controls, an auditor would be least likely to

Inventory count tags are controlled

Which of the following methods for determining inventory cost is not allowed by GAAP?

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash 227

Revenue and Collection Cycle 279

Acquisition and Expenditure Cycle 336

Finance and Investment Cycle 443

Completing the Audit 500

Reports on Audited Financial Statements

Filters

The physical observation procedures for inventory are principally designed to audit for the balance assertions of ___ , _ , and _____ .

Auditors ___ the inventory taking and make _ , but they seldom _____ the entire inventory.