Question 1

Audit planning requires that the auditor consider possible inventory errors or frauds that might occur that could affect the financial statements.For each of the types of inventory errors listed in the following table,indicate what would be the possible effect in the inventory and cost of sales accounts: overstated,understated,or no effect.

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Question 2

Prepare an audit plan for inventory pricing and compilation.

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Question 3

The tests of controls for inventory records would include the following procedures.
A. Existence.
B. Rights.
C. Completeness.
D. Valuation.
E. Presentation and disclosure.
For each of the procedures, place the letter of the correct PCAOB assertion(s). Only one letter per procedure should be used.

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The answer of The tests of controls for inventory records...

Question 4

Inventory observation may need to be scheduled on the year-end date,making a large number of test counts if the test of controls ________________________________.
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The answer of Inventory observation may need to be scheduled...

Question 5

The physical observation procedures for inventory are principally designed to audit for the balance assertions of ____________________________,____________________________,and ____________________________.
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Question 6

Match the examples of specific control assertions in the production cycle with the ASB transaction assertions.

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Question 7

The tests of controls for inventory records would include the following procedures.
A. Existence.
B. Rights and obligations.
C. Completeness.
D. Accuracy and valuations.
E. Presentation and disclosure.
For each of the procedures, place the letter of the correct ASB balance assertion(s). Only one letter per procedure should be used.

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The answer of The tests of controls for inventory records...

Question 8

Auditors ______________________________ the inventory taking and make ________________________________,but they seldom _____________________________ the entire inventory.
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Question 9

Selecting inventory from locations on the warehouse floor,obtaining a test count,and tracing the count to the final inventory compilation produces evidence for the _____________________________ ASB balance assertion.
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The answer of Selecting inventory from locations on the warehouse...

Question 10

A sample from the source documents meets the _____________________________ requirement to determine whether transactions were actually recorded in the inventory records.
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Question 11

With a sample of open and closed production cost reports,vouching labor cost to ________________________________ is a test for ____________________________.
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Question 12

A sample from the perpetual inventory records meets the _____________________________ requirement to determine whether all recorded transactions are supported by reports and documents.
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Question 13

An inventory trial balance can be used to scan for __________________________________ and as a population for sample selection for the ______________________________________.
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The answer of An inventory trial balance can be used...

Question 14

The auditors of Mikel's Shops obtained the following information when performing cutoff testing procedures during their observation of Mikel's physical inventory count at December 31,2009:
  When comparing the cutoff information to the sales records,the auditors found that all these shipments were recorded as 2011 sales.The goods shipped on bills of lading 1235 and 1236 were not counted in the inventory,but the goods on bill of lading 1237 and 1238 were included.
Required:
Prepare the appropriate journal entry to correct the cutoff error.

Accepted Answer

The answer of The auditors of Mikel's Shops obtained the...

Question 15

Explain briefly the two directions of inventory test counts.
A. Basic transaction files to perpetual inventory records (completeness assertion).
B. Perpetual inventory records to the detail source documents (existence or occurrence assertion).

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Question 16

The cost accounting department at Blue Manufacturing Company receives various types of information at the end of each week.The production floor reports time and production work data directly to the cost accounting department.Also,the payroll department sends labor cost data to the cost accounting department.What is the cost accounting department likely to do with this information? Why?

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Question 17

Prepare an audit plan for the observation of an inventory count.

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Question 18

A material error or fraud in inventory typically has a _________________________________ on financial statements.
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Quiz 9: Production Cycle

Prepare an audit plan for inventory pricing and compilation.

The tests of controls for inventory records would include the following procedures. A. Existence. B. Rights. C. Completeness. D. Valuation. E. Presentation and disclosure. For each of the procedures, place the letter of the correct PCAOB assertion(s). Only one letter per procedure should be used.

Inventory observation may need to be scheduled on the year-end date,making a large number of test counts if the test of controls ________________________________. Question also found in study guide

The physical observation procedures for inventory are principally designed to audit for the balance assertions of ,,and . Question also found in study guide

Match the examples of specific control assertions in the production cycle with the ASB transaction assertions.

Auditors __ the inventory taking and make ,but they seldom _ the entire inventory. Question also found in study guide

Selecting inventory from locations on the warehouse floor,obtaining a test count,and tracing the count to the final inventory compilation produces evidence for the _____________________________ ASB balance assertion. Question also found in study guide

A sample from the source documents meets the _____________________________ requirement to determine whether transactions were actually recorded in the inventory records. Question also found in study guide

With a sample of open and closed production cost reports,vouching labor cost to ____ is a test for . Question also found in study guide

A sample from the perpetual inventory records meets the _____________________________ requirement to determine whether all recorded transactions are supported by reports and documents. Question also found in study guide

An inventory trial balance can be used to scan for and as a population for sample selection for the ____. Question also found in study guide

Explain briefly the two directions of inventory test counts. A. Basic transaction files to perpetual inventory records (completeness assertion). B. Perpetual inventory records to the detail source documents (existence or occurrence assertion).

Prepare an audit plan for the observation of an inventory count.

A material error or fraud in inventory typically has a _________________________________ on financial statements. Question also found in study guide

Quiz 9: Production Cycle

Prepare an audit plan for inventory pricing and compilation.

The tests of controls for inventory records would include the following procedures. A. Existence. B. Rights. C. Completeness. D. Valuation. E. Presentation and disclosure. For each of the procedures, place the letter of the correct PCAOB assertion(s). Only one letter per procedure should be used.

Inventory observation may need to be scheduled on the year-end date,making a large number of test counts if the test of controls ________________________________. Question also found in study guide

The physical observation procedures for inventory are principally designed to audit for the balance assertions of ____________________________,____________________________,and ____________________________. Question also found in study guide

Match the examples of specific control assertions in the production cycle with the ASB transaction assertions.

Auditors ______________________________ the inventory taking and make ________________________________,but they seldom _____________________________ the entire inventory. Question also found in study guide

Selecting inventory from locations on the warehouse floor,obtaining a test count,and tracing the count to the final inventory compilation produces evidence for the _____________________________ ASB balance assertion. Question also found in study guide

A sample from the source documents meets the _____________________________ requirement to determine whether transactions were actually recorded in the inventory records. Question also found in study guide

With a sample of open and closed production cost reports,vouching labor cost to ________________________________ is a test for ____________________________. Question also found in study guide

A sample from the perpetual inventory records meets the _____________________________ requirement to determine whether all recorded transactions are supported by reports and documents. Question also found in study guide

An inventory trial balance can be used to scan for __________________________________ and as a population for sample selection for the ______________________________________. Question also found in study guide

Explain briefly the two directions of inventory test counts. A. Basic transaction files to perpetual inventory records (completeness assertion). B. Perpetual inventory records to the detail source documents (existence or occurrence assertion).

Prepare an audit plan for the observation of an inventory count.

A material error or fraud in inventory typically has a _________________________________ on financial statements. Question also found in study guide

The physical observation procedures for inventory are principally designed to audit for the balance assertions of ,,and . Question also found in study guide

Auditors __ the inventory taking and make ,but they seldom _ the entire inventory. Question also found in study guide

With a sample of open and closed production cost reports,vouching labor cost to ____ is a test for . Question also found in study guide

An inventory trial balance can be used to scan for and as a population for sample selection for the ____. Question also found in study guide