MULTIPLE CHOICE: 1. Which of the following is not one of the independent auditor’s objectives regarding the audit of inventories? A. Verifying that the client has used proper inventory pricing B. Verifying the inventory counted is owned by the client C. Ascertaining the physical quantities of inventory on hand D. Verifying that all inventory owned by the client is on hand at the time of the count 2. A client maintains perpetual inventory records in both quantities and pesos. If the assessed level of control risk is high an auditor will probably A. Increase the extent of tests of controls relevant to the inventory cycle B. Request the client to schedule the physical inventory count at the end of the year C. Insist that the client perform physical counts of inventory items during the year D. Apply gross profit tests to ascertain the reasonableness of the physical counts 3. To ascertain whether inventories included in the statement of financial position physically exist, a CPA will ordinarily: A. Obtain confirmation of pledged inventories B. Test client’s shipping cutoff procedures C. Observe physical inventory counts D. Perform analytical review of the relationship of the inventory balance to recent sales
MULTIPLE CHOICE:
1. Which of the following is not one of the independent auditor’s objectives regarding the audit of inventories?
A. Verifying that the client has used proper inventory pricing
B. Verifying the inventory counted is owned by the client
C. Ascertaining the physical quantities of inventory on hand
D. Verifying that all inventory owned by the client is on hand at the time of the count
2. A client maintains perpetual inventory records in both quantities and pesos. If the assessed level of control risk is high an auditor will probably
A. Increase the extent of tests of controls relevant to the inventory cycle
B. Request the client to schedule the physical inventory count at the end of the year
C. Insist that the client perform physical counts of inventory items during the year
D. Apply gross profit tests to ascertain the reasonableness of the physical counts
3. To ascertain whether inventories included in the
A. Obtain confirmation of pledged inventories
B. Test client’s shipping cutoff procedures
C. Observe physical inventory counts
D. Perform analytical review of the relationship of the inventory balance to recent sales
4. The procedures involve in the attendance at physical inventory counting
A. May serve as test of controls or substantive procedures depending on the auditor’s risk assessment , planned approach and the specific procedures carried out
B. Serve as risk assessment procedures
C. Serve as tests of controls
D. Serve as substantive procedures
5. An auditor selected items for test counts while observing a client’s physical inventory. The auditor then traced the test counts to the client’s inventory listing. This procedure most likely obtained evidence concerning management’s assertion of :
A. Valuation
B. Completeness
C. Rights and obligations
D. Existence or occurrence
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