Which of the following is the best audit procedure for the discovery of damaged merchandise in a client's ending inventory?
A) Compare the physical quantities of slow-moving items with corresponding quantities of the prior year.
B) Observe merchandise and raw materials during the client's physical inventory count.
C) Review the management's inventory representation letter for accuracy.
D) Test overall fairness of inventory values by comparing the company's turnover ratio with the industry average.

Question

Quizplus · Accepted Answer

The best audit procedure for the discovery of damaged merchandise in a client's ending inventory is to observe the merchandise and raw materials during the physical inventory count. This will allow the auditor to identify any visibly damaged goods and ensure that they are not included in the ending inventory count. The other options provided do not specifically target the discovery of damaged or unusable inventory.

Which of the Following Is the Best Audit Procedure for the Discovery