Question 1

The auditor's strategy in performing test counts during the inventory observation is to:

Accepted Answer

A)  test all large-dollar items. 
B)  randomly select all test items. 
C)  concentrate tests on high dollar items with random selection of other items. 
D)  concentrate tests in areas where employees seem to be disregarding the inventory instructions. 
A)  test all large-dollar items. 
B)  randomly select all test items. 
C)  concentrate tests on high dollar items with random selection of other items. 
D)  concentrate tests in areas where employees seem to be disregarding the inventory instructions. C

Question 2

During the observation of the inventory count, the auditor has no responsibility to:

Accepted Answer

A)  watch for damaged and obsolete inventory items. 
B)  make some test counts of inventory quantities. 
C)  supervise the taking of the inventory. 
D)  the auditor has responsibility for all of the above 
A)  watch for damaged and obsolete inventory items. 
B)  make some test counts of inventory quantities. 
C)  supervise the taking of the inventory. 
D)  the auditor has responsibility for all of the above C

Question 3

In a typical audit, verification of the ownership of plant and equipment is least likely to involve examination of:

Accepted Answer

A)  the physical characteristics of the items 
B)  "paid invoices". 
C)  registration certificates. 
D)  property tax bills. 
A)  the physical characteristics of the items 
B)  "paid invoices". 
C)  registration certificates. 
D)  property tax bills. A

Question 4

Matters that should be considered by the auditor before reaching a conclusion about the reliability of an inventory count include all of the following except:

Accepted Answer

A)  the type of accounting package used by the firm. 
B)  the general condition of the inventory. 
C)  departures from the entity's inventory count. 
D)  all of the above should be considered 
A)  the type of accounting package used by the firm. 
B)  the general condition of the inventory. 
C)  departures from the entity's inventory count. 
D)  all of the above should be considered

Question 5

Ensuring inventoriinclude all materials, products and supplion hand at the end of the reporting period derivfrom the audit assertion of:

Accepted Answer

A)  completeness 
B)  valuation and allocation. 
C)  existence 
D)  rights and obligations. 
A)  completeness 
B)  valuation and allocation. 
C)  existence 
D)  rights and obligations.

Question 6

There are numerous factors that contribute to the risk of misstatement in the assertions for inventoriand cost of sales. List four of these factors.

Accepted Answer

Any four of the following:
The volume of

Question 7

Cyclical inventory counts differ from full inventory counts in which way?

Accepted Answer

A)  cyclical inventory counts are performed at balance date. 
B)  cyclical inventory counts are only performed by internal audit. 
C)  cyclical inventory counts may involve counting only a portion of inventory items 
D)  they differ in all of the above ways 
A)  cyclical inventory counts are performed at balance date. 
B)  cyclical inventory counts are only performed by internal audit. 
C)  cyclical inventory counts may involve counting only a portion of inventory items 
D)  they differ in all of the above ways

Question 8

When substantiating disposals of property, plant, and equipment, the auditor should be able to find evidence using all of the following except:

Accepted Answer

A)  cash remittance advices. 
B)  written authorisations. 
C)  supplier invoices. 
D)  sales agreements. 
A)  cash remittance advices. 
B)  written authorisations. 
C)  supplier invoices. 
D)  sales agreements.

Question 9

The application of analytical procedurto the audit of inventoriis often:

Accepted Answer

A)  not very useful. 
B)  the only procedure necessary. 
C)  a requirement of the standards. 
D)  used extensively. 
A)  not very useful. 
B)  the only procedure necessary. 
C)  a requirement of the standards. 
D)  used extensively.

Question 10

Evidence concerning the pledging of property, plant, and equipment assets is likely to be obtained through:

Accepted Answer

A)  review of the board minutes. 
B)  confirmation of debt agreements. 
C)  inquiries of management. 
D)  all of the above. 
A)  review of the board minutes. 
B)  confirmation of debt agreements. 
C)  inquiries of management. 
D)  all of the above.

Question 11

Perpetual inventory records need to be compared with actual inventory at regular intervals.

Accepted Answer

A) True 
 B)False

Question 12

What procedurmight be useful to the auditor in determining if all disposals of property, plant, and equipment have been recorded? What procedurwould be adopted by the auditor to gather evidence on the reasonableness, consistency and accuracy of depreciation charg(expense)?

Accepted Answer

1 Disposals
Analyse miscellaneous income

Question 13

The statement about audit strategy for property, plant, and equipment that is inaccurate is:

Accepted Answer

A)  for depreciation and accumulated depreciation inherent risk is affected by the difficulty in estimating both useful lives and residual value 
B)  although material, verification of PPE typically involves significantly less time and cost than verification of current assets. 
C)  unlike current asset accounts, control risk assessments for PPE asset balances are less dependent on controls over major transaction classes. 
D)  none of the above statements is inaccurate 
A)  for depreciation and accumulated depreciation inherent risk is affected by the difficulty in estimating both useful lives and residual value 
B)  although material, verification of PPE typically involves significantly less time and cost than verification of current assets. 
C)  unlike current asset accounts, control risk assessments for PPE asset balances are less dependent on controls over major transaction classes. 
D)  none of the above statements is inaccurate

Question 14

The audit strategy that would be most appropriate when an auditor has assessed a predominantly substantive approach is necessary to determine inventory quantity is:

Accepted Answer

A)  inventory quantities determined by physical count at or within a few days of balance date. 
B)  inventory quantities determined by physical count near balance date, adjusted by reference to perpetual records. 
C)  inventory quantities determined by reference to perpetual records, without a physical count at or near balance date. 
D)  none of the above. 
A)  inventory quantities determined by physical count at or within a few days of balance date. 
B)  inventory quantities determined by physical count near balance date, adjusted by reference to perpetual records. 
C)  inventory quantities determined by reference to perpetual records, without a physical count at or near balance date. 
D)  none of the above.

Question 15

Which of the following is not a function of maintaining inventory records?

Accepted Answer

A)  physically comparing inventory with inventory records. 
B)  recording the movement of goods into inventory. 
C)  ordering goods. 
D)  recording the movement of goods from inventory. 
A)  physically comparing inventory with inventory records. 
B)  recording the movement of goods into inventory. 
C)  ordering goods. 
D)  recording the movement of goods from inventory.

Question 16

Identify the appropriate account balance audit objectivapplicable to inventorifor the assertion categoriof: existence completeness rights and obligations valuation and allocation presentation and disclosure.

Accepted Answer

existence - inventories included in the

Question 17

Analytical procedurare not widely used in the audit of property, plant, and equipment. Which of the following is not a valid comment about the use of analytical procedurin the audit of PPE?

Accepted Answer

A)  compare the annual depreciation charge with the cost of an asset to approximate the depreciation rate. 
B)  a substantial asset balance variation can be caused by one or a few transactions of which the auditor is likely to already be aware. 
C)  comparison of repairs expense with prior years may indicate capitalisation in error. 
D)  none of the above is invalid 
A)  compare the annual depreciation charge with the cost of an asset to approximate the depreciation rate. 
B)  a substantial asset balance variation can be caused by one or a few transactions of which the auditor is likely to already be aware. 
C)  comparison of repairs expense with prior years may indicate capitalisation in error. 
D)  none of the above is invalid

Question 18

Entitifrequently maintain a capital asset register as a subsidiary ledger detailing individual items of PPE. Which of the following would an auditor not expect to find in a capital asset register?

Accepted Answer

A)  cost and accumulated depreciation. 
B)  the date of previous audit inspections. 
C)  serial number and supplier. 
D)  insurance cover. 
A)  cost and accumulated depreciation. 
B)  the date of previous audit inspections. 
C)  serial number and supplier. 
D)  insurance cover.

Question 19

Reviewing data pertaining to inventory quality relatprimarily to the:

Accepted Answer

A)  occurrence assertion. 
B)  completeness assertion. 
C)  rights and obligations assertion. 
D)  valuation and allocation 
A)  occurrence assertion. 
B)  completeness assertion. 
C)  rights and obligations assertion. 
D)  valuation and allocation

Question 20

With respect to property, plant, and equipment, in the first audit engagement, evidence must be obtained as to the fairness of the opening balancand the ownership of the assets making up the balances, whereas in a recurring engagement, the auditor concentraton the current year's transactions.

Accepted Answer

A) True 
 B)False

The auditor's strategy in performing test counts during the inventory observation is to:

During the observation of the inventory count, the auditor has no responsibility to:

In a typical audit, verification of the ownership of plant and equipment is least likely to involve examination of:

Matters that should be considered by the auditor before reaching a conclusion about the reliability of an inventory count include all of the following except:

Ensuring inventoriinclude all materials, products and supplion hand at the end of the reporting period derivfrom the audit assertion of:

There are numerous factors that contribute to the risk of misstatement in the assertions for inventoriand cost of sales. List four of these factors.

Cyclical inventory counts differ from full inventory counts in which way?

When substantiating disposals of property, plant, and equipment, the auditor should be able to find evidence using all of the following except:

The application of analytical procedurto the audit of inventoriis often:

Evidence concerning the pledging of property, plant, and equipment assets is likely to be obtained through:

Perpetual inventory records need to be compared with actual inventory at regular intervals.

What procedurmight be useful to the auditor in determining if all disposals of property, plant, and equipment have been recorded? What procedurwould be adopted by the auditor to gather evidence on the reasonableness, consistency and accuracy of depreciation charg(expense)?

The statement about audit strategy for property, plant, and equipment that is inaccurate is:

The audit strategy that would be most appropriate when an auditor has assessed a predominantly substantive approach is necessary to determine inventory quantity is:

Which of the following is not a function of maintaining inventory records?

Identify the appropriate account balance audit objectivapplicable to inventorifor the assertion categoriof: existence completeness rights and obligations valuation and allocation presentation and disclosure.

Analytical procedurare not widely used in the audit of property, plant, and equipment. Which of the following is not a valid comment about the use of analytical procedurin the audit of PPE?

Entitifrequently maintain a capital asset register as a subsidiary ledger detailing individual items of PPE. Which of the following would an auditor not expect to find in a capital asset register?

Reviewing data pertaining to inventory quality relatprimarily to the:

With respect to property, plant, and equipment, in the first audit engagement, evidence must be obtained as to the fairness of the opening balancand the ownership of the assets making up the balances, whereas in a recurring engagement, the auditor concentraton the current year's transactions.

Introduction and Review of Audit and Assurance

Ethics, Legal Liability and Client Acceptance

Audit Planning I

Audit Planning II

Audit Evidence

Sampling and Overview of the Risk Response Phase of the Audit

Understanding and Testing the Clients System of Internal Controls

Execution of the Audit Performing Substantive Procedur

Auditing Saland Receivabl

Auditing Purchases, Payabland Payroll

Auditing Cash and Investments

Completing and Reporting on the Audit

Filters

Exam 11: Auditing Inventoriand PPE

The auditor's strategy in performing test counts during the inventory observation is to:

During the observation of the inventory count, the auditor has no responsibility to:

In a typical audit, verification of the ownership of plant and equipment is least likely to involve examination of:

Matters that should be considered by the auditor before reaching a conclusion about the reliability of an inventory count include all of the following except:

Ensuring inventoriinclude all materials, products and supplion hand at the end of the reporting period derivfrom the audit assertion of:

There are numerous factors that contribute to the risk of misstatement in the assertions for inventoriand cost of sales. List four of these factors.

Cyclical inventory counts differ from full inventory counts in which way?

When substantiating disposals of property, plant, and equipment, the auditor should be able to find evidence using all of the following except:

The application of analytical procedurto the audit of inventoriis often:

Evidence concerning the pledging of property, plant, and equipment assets is likely to be obtained through:

Perpetual inventory records need to be compared with actual inventory at regular intervals.

What procedurmight be useful to the auditor in determining if all disposals of property, plant, and equipment have been recorded? What procedurwould be adopted by the auditor to gather evidence on the reasonableness, consistency and accuracy of depreciation charg(expense)?

The statement about audit strategy for property, plant, and equipment that is inaccurate is:

The audit strategy that would be most appropriate when an auditor has assessed a predominantly substantive approach is necessary to determine inventory quantity is:

Which of the following is not a function of maintaining inventory records?

Identify the appropriate account balance audit objectivapplicable to inventorifor the assertion categoriof: existence completeness rights and obligations valuation and allocation presentation and disclosure.

Analytical procedurare not widely used in the audit of property, plant, and equipment. Which of the following is not a valid comment about the use of analytical procedurin the audit of PPE?

Entitifrequently maintain a capital asset register as a subsidiary ledger detailing individual items of PPE. Which of the following would an auditor not expect to find in a capital asset register?

Reviewing data pertaining to inventory quality relatprimarily to the:

With respect to property, plant, and equipment, in the first audit engagement, evidence must be obtained as to the fairness of the opening balancand the ownership of the assets making up the balances, whereas in a recurring engagement, the auditor concentraton the current year's transactions.

Introduction and Review of Audit and Assurance

Ethics, Legal Liability and Client Acceptance

Audit Planning I

Audit Planning II

Audit Evidence

Sampling and Overview of the Risk Response Phase of the Audit

Understanding and Testing the Clients System of Internal Controls

Execution of the Audit Performing Substantive Procedur

Auditing Saland Receivabl

Auditing Purchases, Payabland Payroll

Auditing Cash and Investments

Completing and Reporting on the Audit

Filters