Indicate the effects of inventory errors on the financial statements

Explain Inventory Estimation Techniques.

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 4

How does analyzing inventory errors is helpful?

company will be affected by the changes in inventory method

1

If a misstatement of inventory occurs, the net income for-----periods will be misstated

Explain the following statement: “Inventory errors correct themselves.”

2.The __________ method and the __________ method are the two common approaches to record inventory in financial statements.

What can be the effect of inventory errors on the financial reports? How can these errors be corrected?