List the factors that would make the substantiation of the inventory a difficult task.

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Answer 1

Question

Chapter 12, Problem 1RQ

To determine

List the factors that would make the substantiation of the inventory a difficult task.

Expert Solution & Answer

Explanation of Solution

Inventory:

Inventory refers to the goods and services that a business holds for the purpose of resale.

Inventory system:

It is the process of recording inventory movement in the store.

List the factors that would make the substantiation of the inventory a difficult task:

Following are the factors that would make the substantiation of the inventory a difficult task:

There is a variety of method of valuation of inventory such as FIFO, LIFO and weighted average method.
There is a variety of material used in the production of the finished goods. The identification and valuation of the material would require special skills.
The value of the inventory directly affects the profit of the company so there are high chances of fraud.
The flow of inventory is very high throughout the year as the production continues for the whole year. A high flow of inventory would make it difficult to monitor.

Thus, the variety of methods of valuation and the high flow of inventory would make it difficult to audit the inventory.

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Students have asked these similar questions

Define and give examples of off-balance-sheet information. Why should auditors be concerned with such items?

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Explain why you agree or disagree with the following statement:“In most audits, it is more important to test carefully the cutoff for sales than forcash receipts.” Describe how you perform each type of test, assuming documents areprenumbered.

Answer 2

Question

Chapter 12, Problem 1RQ

To determine

List the factors that would make the substantiation of the inventory a difficult task.

Expert Solution & Answer

Explanation of Solution

Inventory:

Inventory refers to the goods and services that a business holds for the purpose of resale.

Inventory system:

It is the process of recording inventory movement in the store.

List the factors that would make the substantiation of the inventory a difficult task:

Following are the factors that would make the substantiation of the inventory a difficult task:

There is a variety of method of valuation of inventory such as FIFO, LIFO and weighted average method.
There is a variety of material used in the production of the finished goods. The identification and valuation of the material would require special skills.
The value of the inventory directly affects the profit of the company so there are high chances of fraud.
The flow of inventory is very high throughout the year as the production continues for the whole year. A high flow of inventory would make it difficult to monitor.

Thus, the variety of methods of valuation and the high flow of inventory would make it difficult to audit the inventory.

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Answer 3

Question

Chapter 12, Problem 1RQ

To determine

List the factors that would make the substantiation of the inventory a difficult task.

Expert Solution & Answer

Explanation of Solution

Inventory:

Inventory refers to the goods and services that a business holds for the purpose of resale.

Inventory system:

It is the process of recording inventory movement in the store.

List the factors that would make the substantiation of the inventory a difficult task:

Following are the factors that would make the substantiation of the inventory a difficult task:

There is a variety of method of valuation of inventory such as FIFO, LIFO and weighted average method.
There is a variety of material used in the production of the finished goods. The identification and valuation of the material would require special skills.
The value of the inventory directly affects the profit of the company so there are high chances of fraud.
The flow of inventory is very high throughout the year as the production continues for the whole year. A high flow of inventory would make it difficult to monitor.

Thus, the variety of methods of valuation and the high flow of inventory would make it difficult to audit the inventory.

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Answer 4

Question

Chapter 12, Problem 1RQ

To determine

List the factors that would make the substantiation of the inventory a difficult task.

Expert Solution & Answer

Explanation of Solution

Inventory:

Inventory refers to the goods and services that a business holds for the purpose of resale.

Inventory system:

It is the process of recording inventory movement in the store.

List the factors that would make the substantiation of the inventory a difficult task:

Following are the factors that would make the substantiation of the inventory a difficult task:

There is a variety of method of valuation of inventory such as FIFO, LIFO and weighted average method.
There is a variety of material used in the production of the finished goods. The identification and valuation of the material would require special skills.
The value of the inventory directly affects the profit of the company so there are high chances of fraud.
The flow of inventory is very high throughout the year as the production continues for the whole year. A high flow of inventory would make it difficult to monitor.

Thus, the variety of methods of valuation and the high flow of inventory would make it difficult to audit the inventory.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 12, Problem 1RQ

To determine

List the factors that would make the substantiation of the inventory a difficult task.

Expert Solution & Answer

Explanation of Solution

Inventory:

Inventory refers to the goods and services that a business holds for the purpose of resale.

Inventory system:

It is the process of recording inventory movement in the store.

List the factors that would make the substantiation of the inventory a difficult task:

Following are the factors that would make the substantiation of the inventory a difficult task:

There is a variety of method of valuation of inventory such as FIFO, LIFO and weighted average method.
There is a variety of material used in the production of the finished goods. The identification and valuation of the material would require special skills.
The value of the inventory directly affects the profit of the company so there are high chances of fraud.
The flow of inventory is very high throughout the year as the production continues for the whole year. A high flow of inventory would make it difficult to monitor.

Thus, the variety of methods of valuation and the high flow of inventory would make it difficult to audit the inventory.

Answer 6

Chapter 12, Problem 1RQ

To determine

List the factors that would make the substantiation of the inventory a difficult task.

Expert Solution & Answer

Explanation of Solution

Inventory:

Inventory refers to the goods and services that a business holds for the purpose of resale.

Inventory system:

It is the process of recording inventory movement in the store.

List the factors that would make the substantiation of the inventory a difficult task:

Following are the factors that would make the substantiation of the inventory a difficult task:

There is a variety of method of valuation of inventory such as FIFO, LIFO and weighted average method.
There is a variety of material used in the production of the finished goods. The identification and valuation of the material would require special skills.
The value of the inventory directly affects the profit of the company so there are high chances of fraud.
The flow of inventory is very high throughout the year as the production continues for the whole year. A high flow of inventory would make it difficult to monitor.

Thus, the variety of methods of valuation and the high flow of inventory would make it difficult to audit the inventory.

Answer 7

Chapter 12, Problem 1RQ

To determine

List the factors that would make the substantiation of the inventory a difficult task.

Answer 8

Expert Solution & Answer

Explanation of Solution

Inventory:

Inventory refers to the goods and services that a business holds for the purpose of resale.

Inventory system:

It is the process of recording inventory movement in the store.

List the factors that would make the substantiation of the inventory a difficult task:

Following are the factors that would make the substantiation of the inventory a difficult task:

There is a variety of method of valuation of inventory such as FIFO, LIFO and weighted average method.
There is a variety of material used in the production of the finished goods. The identification and valuation of the material would require special skills.
The value of the inventory directly affects the profit of the company so there are high chances of fraud.
The flow of inventory is very high throughout the year as the production continues for the whole year. A high flow of inventory would make it difficult to monitor.

Thus, the variety of methods of valuation and the high flow of inventory would make it difficult to audit the inventory.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

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List the factors that would make the substantiation of the inventory a difficult task.

Concept explainers

List the factors that would make the substantiation of the inventory a difficult task.

Explanation of Solution

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Chapter 12 Solutions