Exam 20: Audit of the Inventory and Warehousing Cycle

When auditing inventory cost accounting,the auditor is concerned with all of the following except for:

Receipt of ordered materials by the receiving department will generate the completion of a form called the:

If a client intends to count inventory at an interim date,the auditor should expect there to be all of the following except:

An auditor must inquire about consigned or customer inventory included on the client's premises to satisfy the balance-related audit objective of:

McKesson & Robbins Company is a well-known audit case involving auditor responsibility.What occurred at the McKesson & Robbins Company to change the way in which auditors audit inventory?

The design of tests of details of balances for inventory is affected by audit results from multiple cycles.Identify the cycles,other than the inventory and warehousing cycle that affect the audit of inventory.

Cost of goods sold is generally a residual of beginning inventory less acquisitions plus ending inventory.

Inherent risk is typically assessed at a low level for inventory due to the nature of the asset.

One of the auditor's primary concerns in verifying the transfer of inventory from one location to another is that:

Pricing manufactured inventory is difficult.Auditors must evaluate the method of allocating manufacturing overhead for all but which of the following?

The auditor traces inventory tags identified as non-owned during the physical observation to the inventory listing schedule to make sure these have not been included.This test satisfies the balance-related audit objective of:

State the six functions that make up the inventory and warehousing cycle and,for each function,identify the related documents and/or records that would be used by a manufacturing company.

The most important part of the observation of inventory is to determine whether:

In the audit of inventory,the auditor and client are jointly responsible for making and recording the count of physical inventory; while the auditor is responsible for drawing conclusions about the adequacy of the physical inventory.

The test of details of balance procedure which requires the auditor to perform tests of lower of cost or market,selling price,and obsolescence is an attempt to satisfy the objective of:

The adequacy of internal controls over the physical count of inventory is one of the key determinants of the amount of time needed to test inventory.

Discuss the key control procedures relating to the client's physical count of inventory.

Which of the following is an internal control weakness for a company whose inventory of supplies consists of a large number of individual items?

A useful starting point for becoming familiar with the client's inventory is for the auditor to:

When a client has standard cost records,an efficient and useful method of determining valuation is to review and analyze variances.