A typical substantive procedure for inventory balance and purchase transactions may include performing lower of cost and net realizable value test. Which of the following assertions is addressed by the audit procedure previously mentioned? * A. II, III and IV B. III and IV C. IV and VII D. IV, VI and VII E. III, IV, V and VII

Q: Why do auditors consider inventory errors pervasive?

A:

Q: What type of substantive testing (not test of controls) should be used for each of the following…

A: Substantive  testing is also known as substantive procedures, which are the procedures an auditor…

Q: Which of the following is an analytical procedure? a. Analysis of significant ratios and trends b.…

A: Analytical  procedures are performed to evaluate the financial information.

Q: 1.What are the three primary inventory cost flow assumptions? 2. How is cost of goods sold…

A: Since you have posted multiple questions, we will do the first one for you. To get the other…

Q: 1)Which of the following is not an audit procedure for inventories? a)Review cut-off of inventory…

A: The objective of the first question is to identify the option that is not an audit procedure for…

Q: Discuss how a change to the LIFO method of inventory valuation is handled when it is impracticable…

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Q: Inquiries of warehouse personnel concerning possible obsolete inventory items provide assurance…

A: The value of inventory, the lower of cost and net realizable value, and obsolete items are among…

Q: 3. Allocation and valuation. 4. Understandability and classification. 1, 2.

A: Financial statements refer to the collection of all the balance sheets, income statements, etc to…

Q: When evaluating inventory controls, an auditor would be least likely toa. Inspect documents.b. Make…

A: Auditing:   In auditing, auditors verify the correctness and fair presentation of financial…

Q: STATEMENT 1: The broad categories of assertions are the basis of the auditor in develaping specific…

A: Management Assertion: It is the  claims made by members of management  and is used in regard to the…

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.