Which of the following procedures is usually performed by the auditor to determine if obsolete inventory exists?
Which of the following procedures is usually performed by the auditor to determine if obsolete inventory exists?
a. Footing the inventory subsidiary ledger
b. Analysis of inventory turnover and sales reports
c. Sample the inventory reported by the client, examine the purchase date and receiving reports
d. Confirmation of inventory with client’s customers
Which statement is true?
a. The incomplete recording of asset disposals understates the asset balance
b. Management may be incentivized to over-recognize impairments on machinery when the company is doing really well to lower the subsequent
c. Management never over-accrue impairments on machinery because it reduces the balance of assets
d. Management may be incentivized to over-recognize impairments on machinery when the company is doing really well because auditors will be more skeptic over the performance that is “too good to be true”
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