Exam 14: Auditing Inventory Processes: Tracking and Costing Products in the Land Development and Home Building Industry

Match the following business activities with the related documents used during that activity. You will need to use some activities more than once, and some documents may have more than one related activity.

_____ Materials requisition

Place materials into production

_____ Cost accounting records

Process the goods

_____ Raw materials inventory files

Make finished goods available for sale

Correct Answer:

Verified

_____ Materials requisition

_____ Cost accounting records

_____ Raw materials inventory files

(Matching)

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Question 41

Which of the following audit steps for observing a client's inventory count are to be performed after the physical count is complete?

(Multiple Choice)

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Question 42

In the land development and home building industry, the cost of a parcel of land must be allocated to the various residential units and other facilities in a community.

(True/False)

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Question 43

Which of the following measures is not a good example of a substantive analytical procedure for inventory activities and related accounts?

(Multiple Choice)

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Question 44

An inventory posting method which uses "triggers" to indicate when inventory has passed through a manufacturing stage is:

(Multiple Choice)

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Question 45

For which of the following circumstances would it be appropriate for an auditor to examine the inventory records for evidence of adjustment based on results of the physical count?

(Multiple Choice)

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Question 46

A manufacturer's definition of raw materials would be:

(Multiple Choice)

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Question 47

Which of the following is true regarding perpetual inventory systems?

(Multiple Choice)

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Question 48

Physical controls over inventories are important in a manufacturing environment because they enhance management's ability to:

(Multiple Choice)

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Question 49

Which of the following is true regarding an auditor's assessment of management estimates for calculations related to inventory valuation in the land development and home building industry?

(Multiple Choice)

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Question 50

In order for an auditor to test valuation of a client's inventories, each of the following substantive tests of details of account balances are appropriate except:

(Multiple Choice)

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Question 51

Dual purpose tests performed in the planning stages of the audit inform the auditor regarding changes in the inventory that will influence the audit procedures required by this cycle.

(True/False)

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Question 52

GAAP requires the use of _______ costing for accumulating all direct and allocated costs to inventory units.

(Multiple Choice)

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Question 53

Which of the following tests should be performed by an auditor to ensure that all completed inventory is physically moved to finished goods and that the inventory records are updated concurrent with the physical movement?

(Multiple Choice)

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Question 54

Which of the following documents is most likely to provide evidence to support the validity of estimates used in a client's standard costing system?

(Multiple Choice)

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Question 55

An auditor may select a sample of items from the inventory records and inspect them for consistency with the category of the records. The purpose of this test of controls is to ensure that:

(Multiple Choice)

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Question 56

You are assigned to the audit of Hopewell Homebuilders, Inc., a new audit client. Hopewell uses a standard costing system for inventory accounting. What audit procedures are appropriate for evaluating the reasonableness of management's estimates and underlying assumptions used in a standard costing system?

(Essay)

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Question 57

FSAS 151 requires that abnormal overhead costs be allocated to products based on excess capacity of the facilities.

(True/False)

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Question 58

When applying the percentage of completion method, companies in the land development and home building industry must first:

(Multiple Choice)

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Question 59

An auditor generally concludes that a client's estimate is appropriate if:

(Multiple Choice)

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Question 60

Showing 41 - 60 of 64

Which of the following audit steps for observing a client's inventory count are to be performed after the physical count is complete?

In the land development and home building industry, the cost of a parcel of land must be allocated to the various residential units and other facilities in a community.

Which of the following measures is not a good example of a substantive analytical procedure for inventory activities and related accounts?

An inventory posting method which uses "triggers" to indicate when inventory has passed through a manufacturing stage is:

For which of the following circumstances would it be appropriate for an auditor to examine the inventory records for evidence of adjustment based on results of the physical count?

A manufacturer's definition of raw materials would be:

Which of the following is true regarding perpetual inventory systems?

Physical controls over inventories are important in a manufacturing environment because they enhance management's ability to:

Which of the following is true regarding an auditor's assessment of management estimates for calculations related to inventory valuation in the land development and home building industry?

In order for an auditor to test valuation of a client's inventories, each of the following substantive tests of details of account balances are appropriate except:

Dual purpose tests performed in the planning stages of the audit inform the auditor regarding changes in the inventory that will influence the audit procedures required by this cycle.

GAAP requires the use of _______ costing for accumulating all direct and allocated costs to inventory units.

Which of the following tests should be performed by an auditor to ensure that all completed inventory is physically moved to finished goods and that the inventory records are updated concurrent with the physical movement?

Which of the following documents is most likely to provide evidence to support the validity of estimates used in a client's standard costing system?

An auditor may select a sample of items from the inventory records and inspect them for consistency with the category of the records. The purpose of this test of controls is to ensure that:

FSAS 151 requires that abnormal overhead costs be allocated to products based on excess capacity of the facilities.

When applying the percentage of completion method, companies in the land development and home building industry must first:

An auditor generally concludes that a client's estimate is appropriate if:

An Introduction to Auditing

Overview of an Integrated Audit

The Auditors Role in Society

Legal Environment Affecting Audits Pt Iii Executing an Integrated Audit

Client Acceptance and Continuance and Preliminary Engagement Procedures

Audit Planning and Risk Assessment

Internal Control, Understanding the Clients Internal Control Over Financial Reporting and Auditing Design Effectiveness

Planning and Testing Operating Effectiveness of Internal Control Over Financial Reporting

Substantive Procedures and the Financial Statement Audit

Auditing Revenue Process: Sales, Billing and Collection in the Health-Care Provider and Retailing Industries

Completing the Integrated Audit and Reporting

The Acquisition and Payments Cycle and Related Accounts: Purchases, Cash Disbursements and Other Related Activities in the Automotive Industry

Auditing Human Resources Cycle Process: Personnel and Payroll in Service Industries

Assets, Liabilities and Equity Related to the Financing Cycle

Topics Beyond the Integrated Audit

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