Auditing the valuation assertion for inventory of a client utilizing the FIFO cost flow assumption will require the auditor to examine which of the following?
A) Invoices representing the more recent purchases of inventory.
B) Invoices representing the purchase of base year inventory in the year of inception.
C) Shipping documents for a sample of cost of goods sold transactions during the year.
D) Shipping documents for a sample of units on hand in the interim period.

Question

Quizplus · Accepted Answer

The FIFO (First-In, First-Out) method assumes that the oldest inventory items are sold first. Therefore, to audit the valuation assertion, the auditor should examine invoices representing the more recent purchases of inventory to ensure that the inventory is valued at the most recent costs.

Auditing the Valuation Assertion for Inventory of a Client Utilizing