Matching
Match the following control objectives below with the appropriate test of controls.
Premises:
_____ Inspect documentation and reperform calculations of inventory value to identify and evaluation declines in value.
_____ Review management's policies for making estimates for reasonableness of underlying assumptions, relevant factors, and process.
_____ Select samples from each category of inventory records and inspect the goods for physical existence and consistency with the category of inventory records.
_____ Select a sample of work-in-process inventory and trace to the inventory records and supporting documents from purchasing and payroll.
_____ Evaluate whether management's inventory count controls and procedures are appropriate and observe inventory counting to assess whether the procedures are being followed.
_____ Select a sample of inventory for which production is complete and examine physical and documentary evidence showing that the items were transferred.
_____ Test the mathematical accuracy of any calculations performed on the results of the inventory count.
_____ Tour the storage and production facilities and observe the security procedures being used for inventory.
Responses:
To ensure that cost accounting procedures are accurate
To ensure that inventory in the production process is properly included in the work-in-process records
To ensure that the work-in-process and finished goods inventory records are updated when production is completed
To ensure that the correct result of the physical count, in conjunction with cost information, is used to update the accounting records
To ensure that physical inventory counting procedures are proper
To ensure that inventories are physically protected from theft or damage
To ensure that inventory exists
To ensure that policies for assessing inventory valuation are appropriate
Correct Answer:
Premises:
Responses:
_____ Inspect documentation and reperform calculations of inventory value to identify and evaluation declines in value.
_____ Review management's policies for making estimates for reasonableness of underlying assumptions, relevant factors, and process.
_____ Select samples from each category of inventory records and inspect the goods for physical existence and consistency with the category of inventory records.
_____ Select a sample of work-in-process inventory and trace to the inventory records and supporting documents from purchasing and payroll.
_____ Evaluate whether management's inventory count controls and procedures are appropriate and observe inventory counting to assess whether the procedures are being followed.
_____ Select a sample of inventory for which production is complete and examine physical and documentary evidence showing that the items were transferred.
_____ Test the mathematical accuracy of any calculations performed on the results of the inventory count.
_____ Tour the storage and production facilities and observe the security procedures being used for inventory.
Premises:
_____ Inspect documentation and reperform calculations of inventory value to identify and evaluation declines in value.
_____ Review management's policies for making estimates for reasonableness of underlying assumptions, relevant factors, and process.
_____ Select samples from each category of inventory records and inspect the goods for physical existence and consistency with the category of inventory records.
_____ Select a sample of work-in-process inventory and trace to the inventory records and supporting documents from purchasing and payroll.
_____ Evaluate whether management's inventory count controls and procedures are appropriate and observe inventory counting to assess whether the procedures are being followed.
_____ Select a sample of inventory for which production is complete and examine physical and documentary evidence showing that the items were transferred.
_____ Test the mathematical accuracy of any calculations performed on the results of the inventory count.
_____ Tour the storage and production facilities and observe the security procedures being used for inventory.
Responses:
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