Analytical reviews used to detect inventory theft might include a period-to-period comparison of: a. a percentage increase in sales that does not match the exact same percentage increase in of cost of goods sold b. gross profit (net sales - of goods sold) ÷ net sales C. d. average inventory ÷ cost of goods sold all of the above

Analytical reviews used to detect inventory theft might include a period-to-period comparison of: a. a percentage increase in sales that does not match the exact same percentage increase in of cost of goods sold b. gross profit (net sales - of goods sold) ÷ net sales C. d. average inventory ÷ cost of goods sold all of the above

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter11: Auditing Inventory, Goods And Services, And Accounts Payable: The Acquisition And Payment Cycle

Section: Chapter Questions

Problem 12CYBK

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Similar questions

Identify items missing in determining cost of goods sold For (a) through (e), identify the items designated by X and Y. A. Purchases (X + Y) = Net purchases B. Net purchases + X = Cost of inventory purchased C. Inventory (beginning) + Cost of inventory purchased = X D. Inventory available for sale X = Cost of inventory before estimated returns E. Cost of goods sold before estimated returns X = Cost of goods sold
What does an increase in inventory imply? How would this increase in inventory be reported under the indirect method?
3. Indicate the effect of the following errors on gross profit and cost of goods sold (COGS), i.e., whether 'understatement or overstatement'. Treat each item independently of the other items and assume a periodic inventory system. Nature of error Effect of error on: Gross profit COGS a. Overstatement of beginning inventory b. Understatement of purchases c. Overstatement of purchase returns d. Understatement of purchase returns e. Overstatement of ending inventory f. Understatement of ending inventory
Which of the following may be an indication of inventory theft? COGS is significantly different from the forecast amount a physical count of inventory reveals missing items inventory turnover shows an abnormal increase gross profit falls significantly e. all of the above
Assuming no beginning inventory, what can be said about the trend ofinventory prices if cost of goods sold computed when inventory is valuedusing the FIFO method exceeds cost of goods sold when inventory isvalued using the LIFO method? a. Prices decreased.b. Prices remained unchanged.c. Prices increased.d. Price trend cannot be determined from information given.
Which of the following is used to analyze the efficiency and effectiveness of inventory management? inventory turnover only days’ sales in inventory only both inventory turnover and days’ sales in inventory neither inventory turnover nor days’ sales in inventory
Which inventory method provides a better matching ofcurrent costs with sales revenue on the income statementbut also results in older values being reported for inventory on the balance sheet?
How are errors in inventory between physical counts and the perpetual impact the income statement? O O O O A. An inventory shortage in Inventory reduces cost of goods sold. B. A shortage in physical counts reduces current assets. C. A shortage in Inventory increases the cost of goods sold. D. A shortage in inventory increases net income.
The cost of purchase of inventory does not include:A. Freight handling and other cost directly attributable to the acquisition of goods B. Import duties and recoverable taxes C. None of the choices D. Purchase price Which of the follow inventory method reports most closely the current cost of inventory?A. Identification B. Weighted average C. Lifo D. Fifo
An increase in the inventory turnover rate is indicative of: Multiple Choice a decrease in the cost of goods sold. a decrease in the supply of inventory. an increase in the supply of inventory. an increase in sales revenue.
Gross profit will result if: Choose operating expenses are less than net income naging inventories sales revenues are greater than operating expenses sales revenues are greater than cost of goods sold operating expenses are greater than cost of goods sold
Which of the following statements is incorrect? Select one: a. By using the IFRS, goods shipped on consignment from a seller to another company should be included in the inventory of the seller. b. Many argue that LIFO provides a better matching of current costs against revenue from a financial reporting point of view. c. Both IFRS and GAAP account for inventory acquisitions at historical cost and value inventory at the lower-of-cost-or-net-realizable value subsequent to acquisition. d. Both inventory and net income are higher when companies use LIFO in a period of inflation.