How does the auditor decide if the physical count can be taken before year-end?
The accuracy of the perpetual inventory master files.
100
It includes all the tests of the client's unit prices to determine whether they are correct?
What is Inventory Price Test
100
This substantive analytical procedure checks for the possible misstatement of an over or understatement of inventory costs
What is comparing unit inventory costs with prior years
100
What is the overall objective in the audit of the inventory and warehousing cycle?
To provide assurance that the financial statements fairly account for raw materials, work-in-process, finished goods, and cost of goods sold.
200
Who is responsible for setting up the procedures for taking an accurate physical inventory count?
The client.
200
Which inventory account (in a manufacturing company) is the easiest to Verify?
What is Raw Materials (or Purchased Inventory)
200
This substantive analytical procedure checks for the possible misstatement of obsolete inventory
What is comparing inventory turnover with prior years
200
What 3 transaction cycles have a relationship with the inventory and warehousing cycle?
Payroll and personnel
Sales and collection
Acquisition and payment
300
What type of companies most often have high inherent risk because of significant inventory?
Manufacturing, wholesale, and retail companies.
300
In pricing inventory, auditors must consider whether ________ ________ is lower than historical cost.
What is Market Value
300
Other means of measuring the reasonableness of inventory-related balances
What is non-financial information
300
What is the record of the Colorado Rockies?
What is 41-24
400
When is physical examination of inventory not required?
When the inventory is housed in a public warehouse or overseen by outside custodians.
400
Includes testing the clients summarization of the inventory counts, recalculating price times quantity, footing the inventory summary, and tracing the totals to the GL.
What is Inventory Compilation Test
400
This substantive analytical procedure checks for the possible misstatement of an over or understatement of inventory and cost of good sold.
What is comparing gross margin with prior years.
400
Name 2 of the 5 reasons why Inventory and Warehousing is one of the most complex parts of an audit?
What is
• Largest BS account
• Many locations
• Diverse inventory
• Estimates of obsolescence
• Several acceptable inventory valuation methods
500
What is the only balance-related audit objective not included in the audit procedures for physical inventory observation?
Detail tie-ins
500
In performing inventory valuation test (price test) the auditor has three concerns:
What is 1) Accordance with accounting standards
2) Consistent Application
3) Inventory cost versus market value
500
Types of non-financial information used to assess the reasonableness of inventory-related balances
What are size & weight of inventory and storage information & capacity
500
The first name name of what became UNC on April 1, 1889?