Periodic or cycle counts of selected inventory items are made at various times during the year rather than during a single inventory count at year-end. Which of the following is necessary if the auditor plans to observe inventories at interim dates?
A)Complete recounts by independent teams are performed.
B)Perpetual inventory records are maintained.
C)Unit cost records are integrated with production accounting records.
D)Inventory balances are rarely at low levels.

Question

Quizplus · Accepted Answer

If the auditor plans to observe inventories at interim dates, it is necessary that perpetual inventory records are maintained. This will allow the auditor to reconcile the physical inventory count with the perpetual inventory records to ensure accuracy.

Periodic or Cycle Counts of Selected Inventory Items Are Made