FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question
An auditor would vouch inventory on the inventory status report to the vendor’s invoice to
obtain evidence concerning management’s balance assertions about
a. Existence.
b. Rights and obligations.
c. Completeness.
d. Valuation
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- When auditing merchandise inventory at year-end, the auditor performs audit proceduresto obtain evidence that no goods held on consignment are included in the client’s ending inventory balance. This audit procedure provides assurance about which managementassertion?a. Completeness.b. Existence.c. Valuation and allocation.d. Rights and obligations.e. Occurrence.arrow_forwardInquiries of warehouse personnel concerning possible obsolete inventory items provide assurance about management's assertion of: 1. Completeness 2. Rights and Obligations. 3. Presentation 4. Valuation O 1 O 2 O 3arrow_forward1. What is the primary reason we perform physical inventory observations? A. To obtain sufficient appropriate audit evidence over the existence and condition of inventory to meet the objectives of the professional auditing standards B. To obtain sufficient appropriate audit evidence that inventory is recorded at the correct cost on the financial statements C. To provide assurance over the time it takes inventory to leave the warehouse and arrive at the customer D. To verify assumptions used in management's estimates regarding inventory reserves 2. What piece of information gained during the understanding of the inventory process would be LEAST relevant to the scoping of inventory locations? A. The company hired a new count supervisor for one of their largest locations B. Book to physical adjustments were material in the prior year for 2 locations C. Cycle count accuracy rates have been greater than management's targets in the prior year and current year to date D. WIP inventory takes…arrow_forward
- The auditor observes the client's inventory test counts and locates the items on the client's inventory listing to test for which of the following financial statement assertions? 1. Completeness. 2. Rights and obligations. 3. Allocation and valuation. 4. Understandability and classification. O 1 O 2 O 3 O 4arrow_forwardIdentify the following questions as most likely to be asked by an internal (I) or an external (E) userof accounting information. Which inventory items are out of stock?arrow_forwardSTATEMENT 1: The broad categories of assertions are the basis of the auditor in developing specific audit objectives. STATEMENT 2: A specific audit objective related to the assertion of valuation is that inventory quantities include all products, materials, and supplies on hand. A. Only Statement 1 is incorrect B. Only Statement 1 is correct C. Both statements are incorrect D. Both statements are correctarrow_forward
- Indicate a specific audit procedure under each of the following categories, as applied particularly in the sales and collection cycle.a. test of controlb. substantive test of transactionsc. substantive test of account balancesarrow_forwardThe following question pertain to the financial statement assertions enumerated below: T- Existence or Occurrence Il - Completeness III - Cut-off IV - Valuation and Allocation V- Accuracy VI - Rights and Obligations VII – Presentation and Disclosure and Classificationarrow_forward
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