For which of the following circumstances would it be appropriate for an auditor to examine the inventory records for evidence of adjustment based on results of the physical count?
A) To ensure that the process for the physical count of inventory includes proper procedures.
B) To ensure that the correct result of the physical count, in conjunction with cost information, is used to update the accounting records.
C) To ensure that the policies for assessing inventory valuation are appropriate.
D) To ensure that the inventory records are updated for physical movement of items within the production process.

Question

Quizplus · Accepted Answer

Examining inventory records for evidence of adjustment based on results of the physical count would be appropriate to ensure that the correct result of the physical count, in conjunction with cost information, is used to update the accounting records. This helps to ensure that the financial statements are accurate and fairly presented. The other options do not specifically require an examination of the inventory records for evidence of adjustment.

For Which of the Following Circumstances Would It Be Appropriate