To BEST ascertain that a company has properly included merchandise that it owns in its ending inventory, the auditor should review and test the:
A) contractual commitments made by the purchasing department.
B) terms of the open purchase orders.
C) purchase invoices received on or around year- end.
D) purchase cutoff procedures.

Question

Quizplus · Accepted Answer

The purchase cutoff procedures are important to review and test to ensure that the inventory balance at year-end includes all merchandise that the company actually owns. This involves reviewing purchases made near year-end and ensuring that they have been properly recorded in the inventory balance. Therefore, the (D) purchase cutoff procedures are the best choice.

To BEST Ascertain That a Company Has Properly Included Merchandise