When the client's physical inventory takes place before the last day of the year, it is still necessary to perform an accounts payable cutoff at the time of the physical count.In addition, the auditor must verify whether all acquisitions taking place between the physical count and the end of the year were added to:
A) accounts payable and cost of goods sold.
B) the physical inventory and accounts payable.
C) the physical inventory.
D) accounts payable.

Question

Quizplus · Accepted Answer

When the physical inventory is taken before the year-end, the auditor needs to ensure that acquisitions between the inventory count and the year-end are properly recorded in both the physical inventory (to reflect the actual inventory on hand at year-end) and in accounts payable (to ensure all liabilities are accounted for). This ensures the accuracy of both the inventory and financial records.

When the Client's Physical Inventory Takes Place Before the Last