Answered: Describe the procedures, documents, and…

Describe the procedures, documents, and departments involved when insufficient inventory is available to fill a customer’s approved order.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Provide examples of some procedures that can avoid inventory shrinkage.
How can we prevent inventory from being reordered automatically each time the system detects a low inventory level
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Assuming that the auditor properly documents receiving reportnumbers as a part of the physical inventory observation procedures, explain how theproper cutoff of purchases, including tests for the possibility of raw materials in transit,should be verified later in the audit
A portion of the raw materials inventory was misclassified as finished goods on the balance sheet. Please indicate which of the following management assertions regarding inventory is being violated. O Existence and Occurrence O Completeness O Valuation or accuracy O Rights and obligations O Presentation and disclosures
All of the following are documents used for inventory control except Oa. a receiving report. Ob. a petty cash voucher Oc. a vendor's invoice.
Why is it important for auditors to obtain control information over inventory count sheets or tickets?
A serious exposure for an organization that is connnected with the revenue cycle is the loss of assets. What is the related threat and applicable contrtol procudure associated with this exposure? A. receiving unordered goods; compare to valid order B. billing errors; reconciliation of shipping documents to sales order C. shipping errors, data entry controls D. theft of inventory; documentation of all internal transfers of inventory
A serious exposure in the ordering process of the expenditure cycle is increased inventory costs. What is the related threat and applicable control procedure that address this exposure? A. mistakes in counting; do not inform receiving employees about quantity ordered B. paying for items not received; requiring that all supplier invoices be matched to supporting documents C. purchasing at inflated prices; review of purchase orders D. theft of inventory; periodic physical counts of inventory and reconciliation to recorded quantities E. mistakes in posting to accounts payable; reconciliation of detailed accounts payable to the general ledger control account
Discuss how the inventory process supports the production planning process and the risks to the production process if inventory process control goals are not achieved. do not limit your discussion to losses from fraud.