the auditor decided to render analytical procedure in testing the reasonableness of the inventory balances of the client as of December 31. The auditor used the retail method in projecting the expected inventory balance. Which of the following is incorrect? Group of answer choices Under the retail method, any abnormal shortages or overages shall be deducted from cost of goods available for sale both at retail and at cost in determining the cost percentages to be used. No further audit procedure is necessary if the difference between the projected inventory balance resulting the inventory estimation (retail method) and the balance reported per books is within the auditor’s tolerable error for the account balance. The auditor is allowed to heavily rely on analytical procedure under the assumption that the internal control over inventories are strong thus the assessment of control risk is at below the maximum level. If the observed difference between the estimated inventory as a result of the audit and the reported inventory per books is considered mat

Q: 45. Which of the following statements islare false about the steps in a purchase transaction? * 1.…

A: Normally a purchase transaction has the following steps:  The first step is to knowing the required…

Q: A retail company recently completed a physical count of ending merchandise inventory to use in…

A: In the given situation, the FOB shipping point inventory was correctly recorded in purchases and…

Q: portion of the raw materials inventory was misclassified as finis f the following management…

A: In the auditing process, assertions are claims that determine that financial statements are genuine…

Q: To correct a sales invoice that was accidentally posted containing the wrong inventory - Select one:…

A: A sales invoice is a commercial document issued by a seller to a buyer as an official record of a…

Q: A typical substantive procedure for inventory balance and purchase transactions may include…

A: The question is related to the Substantive audit procedures. The Substantive audit procedures are…

Q: Completeness

A: Correct answer :- B Completeness

Q: The receiving department compares the quantity received with the quantity prin on the receiving…

A: PO termed as Purchase order refers to the document which legally binds and it is created through…

Q: he auditor of Kent Ltd selects a sample from the file of shipping documents in order to confirm that…

A: An audit report is provided by an independent auditor that contains the opinion of the auditor on…

Q: You are working on the testing of internal controls over price changes in the inventory system. You…

A: An organization's internal controls and procedures are systematically examined and evaluated as part…

Q: The following question pertain to the financial sta

A: substantive audit procedure are processes, steps, tests performed by auditors, which creates…

Q: The Habib Company did not include in their inventory count inventory that was sold to a customer…

A: Under FOB destination, titles of goods are transferred to the buyer only when goods are delivered to…

Q: The auditor computed inventory turnover and compared it to prior years.  This substantive test…

A: Auditing inventory refers to cross-checking the physical inventory with the inventory reported in…

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: You are testing inventory.  You determined that inventory exists, nothing is missing from inventory,…

A: The following are some examples of inventory risks: Due to the difficulty of valuing inventory, it…

Q: When auditing merchandise inventory at year-end, the auditor performs audit proceduresto obtain…

A: Given information is: When auditing merchandise inventory at year-end, the auditor performs audit…

Q: The accounts in the working trial balance are usually the summary accounts to appear in the…

A: A trial balance is a bookkeeping worksheet in which the balance of all ledgers are compiled into…

Q: During the taking of physical inventory, the controller intentionally withheld several inventory…

A: If the auditor had observed the physical inventory count, they would have seen that the controller…

Q: Determine what report (unqualified, qualified, adverse, or disclaimer) is appropriate Your client…

A: Unqualified Opinion with an additional explanatory paragraph

Q: Which of the following substantive procedures would most likely help an auditor determine whether…

A: Substantive procedures are performed to detect the material misstatement or fraud at the assertion…

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…

Audit Procedures

Audit Procedures are methods and techniques performed by the auditor to determine the quality of financial information of clients, thereby expressing an opinion on true & fair view of financial statements and entity position. They are identified and applied at the planning stage of audit after determining audit objectives, scope, approach, and risk assessment.