Internal controls are policies and procedures defined by the management to ensure the smooth functioning of the business processes. Internal controls ensure the complete and correct accounting and safeguards to the assets. To choose: the objective of the internal control over inventory management process.

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Chapter 13, Problem 13.15MCQ

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Concept Introduction:

Internal controls are policies and procedures defined by the management to ensure the smooth functioning of the business processes. Internal controls ensure the complete and correct accounting and safeguards to the assets.

To choose: the objective of the internal control over inventory management process.

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The tests of controls for inventory records would include the following procedures.A. Existence.B. Rights.C. Completeness.D. Valuation.E. Presentation and disclosure.For each of the procedures, choose the letter of the correct PCAOB assertion(s). Only one letter per procedure should be used._______ 1. Trace a sample of sales invoices to perpetual inventory record entry of issue._______ 2. Select a sample of inventory item from perpetual records and vouch additions to receiving reports._______ 3. Select a sample of shipping documents and review the accounting summary of the quantities and prices._______ 4. Trace posting of sample of sales invoices to amounts in general ledger._______ 5. Review the appropriateness of standard costs to price inventory issues and cost of goods sold

Which of the following is not generally an internal control activity? a.Physically counting inventory in a perpetual inventory system b.Establishing clear lines of authority to carry out specific tasks c.Reducing the cost of hiring seasonal employees d.Limiting access to computerized accounting records

Which of the following internal control activities most likely addresses the completeness assertion for inventory?a. The work-in-process account is periodically reconciled with subsidiary inventory records.b. Employees responsible for custody of finished goods do not perform the receiving function.c. Receiving reports are prenumbered, and the numbering sequence is checked periodically.d. There is a separation of duties between the payroll department and inventory accounting personnel