Cravens was asked to perform the firstaudit of a wholesale business that doesnot maintain perpetual inventoryrecords. Cravens has observed thecurrent inventory but has not observedthe physical inventory at the previousyear-end date and concludes that theopening inventory balance, which is notauditable, is a highly material factor inthe determination of cost of goodssold for the current year. Cravens willprobably *Issue a disclaimer of opinionIssue an adverse opinionan unqualified/unmodifiedO opinion on the balance sheet andincome statement except for inventoryresIssue and unqualified opinion plusexplanatory paragraph

The correct answer is a) Issue a disclaimer of opinion

Answered: : of a wholesale business that doe…

Business

Accounting

: of a wholesale business that doe naintain perpetual inventory rds. Cravens has observed the

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: FIFO or LIFO

A: Inventory is the current assets reported under the head current assets in the balance sheet of the…

Q: Which of the following are characteristics of a perpetual inventory system? (a). Management knows…

A: There were two types of inventory systems to record and maintain inventory. 1. Periodic…

Q: "Market" is defined in the "Lower-of-cost-or-market" rule required to account for FIFO inventory as:…

A: Inventory- Inventory refers to the items which business kept on hand in order to make the money, it…

Q: A business using the perpetual inventory system, with its detailed subsidiary records, does not need…

A: The company can maintain its records of inventory on basis of two different systems: 1. Perpetual…

Q: Explain how the inventory cost flow assumption that was utilized might have an impact on liquidity…

A: Inventory Cost Flow Assumptions refer to the many ways for determining the cost of inventory sold…

Q: Make a comparison between periodic and perpetual inventory systems and explain under which…

A: Answer: As per Q/A guidelines first question has been answered. Please repost remaining question.…

Q: Consider each of the following independent situations. Should a company report the goods in its…

A: A consignee is an agent who sells the goods Received on consignment and has no economic control over…

Q: The inventory costing method that matches each unit of inventory with its actual cost is referred to…

A: There are many methods to calculate the inventory like FIFO and LIFO method, average cost method,…

Q: Which of the following statements best explains the relationship between the acquisition/payment…

A: Solution Explanation - Sales collection process is a series of operating events that collectively…

Q: A small manufacturing or trading concern maintains its inventory on which system a. Average…

A: Inventory means the stock of goods in hand . Goods means the thing in which the business deals and…

Q: ) Is the accounting cycle in a merchandising operations different from a service operations?…

A: 1) yes the accounting cycle in a merchandising operations is different from a service operations .…

Q: oods purchased and held for resale are commonly known as _____. perpetual inventoryperiodic…

A: Periodic Inventory System: The periodic inventory system records and updates the inventory at the…

Q: When using the periodic inventory system, which inventory costing method(s) always produces the same…

A: Under the periodic inventory system. the inventory is counted usually at the end of the period and…

Q: Consider each of the following independent situations. Should a company report the goods in its…

A: If the seller expects a sales return, then it should debit sales return and credit refund liability…

Q: The most common approach to implementing the lower of cost or market rule for inventory valuation is…

A: Inventory means the stock of goods in which the businessmen deals. Inventory is always valued at…

Q: xplain the difference between perpetual inventory system and periodic inventory system

A: Companies and organizations can record their inventories using any of the two inventory system -…

Q: Which inventory system would allow a business to determine inventory shrinkage (breakage, theft,…

A: Inventory Systems: Inventory systems are classified as periodic or perpetual based on how invetory…

Q: 17. Models of inventory systems frequently consider the relationships among a beginning inventory, a…

A: The objective of the question is to establish a mathematical relationship between the beginning…

Q: Describe a situation where a merchant would use the specific identification method for recording…

A: A merchant would use specific identification method when the individual items in inventory can be…

Q: Are there different methods used to account for perpetual inventory?

A: Perpetual inventory is a continous estimation of the inventory balances based on our books of…

Q: When sales are made with a right of return, the company_ а. should recognize revenue for the full…

A: The revenue would be posted in the income statement of the company. The expenses are deducted form…

Q: Explain the types of inventory and the differences between a perpetual inventory system and a…

Q: Consider each of the following independent situations. Should a company report the goods in its…

A: The purchase obligation is yet to take place, so, neither an asset nor a liability is created.…

Q: Give TWO examples of methods of inventory accounting. (With explanation)

A: Inventory accounting : Inventory accounting is a method used to ascertain the cost of inventory.…

Q: Which U.S. GAAP principle or rule would apply if the net realizable value of acompany’s inventory is…

A: Net realizable value: Net realizable value is the net amount of receivables which a business expects…

Q: The following information for Tuell Company is available: 1. Assume…

A: Inventory refers to all of the items, goods, commerce, and materials held by a company for the…

Q: What are some inventory ordering costs? As defined here, are thesecosts fixed or variable?

A: Inventory ordering cost can be define as the cost that is incurred by the firm during order…

Question

Cravens was asked to perform the first
audit of a wholesale business that does
not maintain perpetual inventory
records. Cravens has observed the
current inventory but has not observed
the physical inventory at the previous
year-end date and concludes that the
opening inventory balance, which is not
auditable, is a highly material factor in
the determination of cost of goods
sold for the current year. Cravens will
probably *
Issue a disclaimer of opinion
Issue an adverse opinion
an unqualified/unmodified
O opinion on the balance sheet and
income statement except for inventory
res
Issue and unqualified opinion plus
explanatory paragraph

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Financial Reporting in Hyperinflationary Economies

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Based on the fundamental principle of IAS2, identify two (2) circumstances where the NRV of inventory might be lower than its cost?
Which inventory method is least likely to be used under IFRS? A . First in, fi rst out (FIFO).
When identical units of an item are purchased at different costs a. an inventory cost flow method must be used under a periodic inventory system only. b. an inventory cost flow method is not used under either a perpetual or a periodic inventory system. can inventory cost flow method must be used under both a perpetual and a periodic inventory system. d. an inventory cost flow method must be used under a perpetual inventory system only.
Explain the differences between a Perpetual Inventory system and a Periodic Inventory System. Explain how one is better than the other.
A method of inventory valuation wherein each particular item in the ending inventory isvalued on the basis of the replacement price, in the volume in which they are usuallypurchased or produced by the a. Moving average inventory method.b. Market inventory method.c. Elapsed time inventory method.d. Perpetual inventory method.
If a purchaser using a perpetual system agrees to freight terms of FOB shipping point, then the carrier will bear the freight cost. ● Inventory account will be increased. O O O seller will bear the freight cost. Inventory account will not be affected.
Differentiate between perpetual and periodic Inventory system.