Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Chapter 18, Problem 15DQP
To determine
Explain the differences between FOB destination and FOB origin. Explain the procedures that auditor must follow towards new acquisitions of the inventory on the FOB origin basis in the year end.
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what work will an auditor carry out prior to the commencement of the inventory count.
When auditing merchandise inventory at year-end, the auditor performs audit procedures toensure that all goods purchased before year-end are received before the physical inventorycount. This audit procedure provides assurance about which management assertion?a. Cutoff.b. Existence.c. Valuation and allocation.d. Rights and obligations.e. Occurrence.
When verifying debits to the perpetual inventory records of a nonmanufacturing company, auditors would be most interested in examining a sample of purchasea. Approvals.b. Requisitions.c. Invoices.d. Orders.
Chapter 18 Solutions
Auditing And Assurance Services
Ch. 18 - List five asset accounts, three liability...Ch. 18 - Prob. 2DQPCh. 18 - Prob. 3DQPCh. 18 - Prob. 4DQPCh. 18 - Prob. 5DQPCh. 18 - Prob. 6DQPCh. 18 - Prob. 7DQPCh. 18 - Prob. 8DQPCh. 18 - Prob. 9DQPCh. 18 - Prob. 10DQP
Ch. 18 - Prob. 11DQPCh. 18 - Prob. 13DQPCh. 18 - Prob. 14DQPCh. 18 - Prob. 15DQPCh. 18 - Prob. 16.1MCQCh. 18 - Prob. 16.2MCQCh. 18 - Prob. 16.3MCQCh. 18 - Prob. 17.1MCQCh. 18 - Prob. 17.2MCQCh. 18 - Prob. 17.3MCQCh. 18 - Prob. 18.1MCQCh. 18 - Prob. 18.2MCQCh. 18 - Prob. 18.3MCQCh. 18 - Prob. 19DQPCh. 18 - Prob. 20DQPCh. 18 - Prob. 21DQPCh. 18 - Prob. 22DQPCh. 18 - The following misstatements are included in the...Ch. 18 - Prob. 24DQPCh. 18 - Prob. 25DQPCh. 18 - Prob. 26DQPCh. 18 - Prob. 27DQPCh. 18 - Prob. 28DQPCh. 18 - Prob. 30C
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- Which of the following audit procedures is the best test of the accuracy, valuation and allocation assertion for inventory? Select one: a. Obtaining the last receiving record numbers for the period and checking that they were taken up correctly b. Confirming stock held on consignment c. Comparing standard costs to actual sales prices. d. Attending the annual stocktakearrow_forwardThe auditor generally decides whether the inventory count can be taken before year-end primarily on the basis of: audit efficiency. accuracy of the perpetual inventory master files. client convenience. audit staff availability.arrow_forwardWhich of the following financial statements would be impacted by a current-year ending inventory error, when using a periodic inventory updating system? A. balance sheet B. income statement C. neither statement D. both statementsarrow_forward
- An audit trail allows you to trace a source document to its final effect on the financial statements or vice versa.Describes what the audit trail would be for an inventory purchase.arrow_forwardWhich of the following audit procedures probably would provide the most reliable evidence related to the entity’s assertion of rights and obligations for the inventory account?a. Trace test counts noted during physical count to the summarization of quantities.b. Inspect agreements for evidence of inventory held on consignment.c. Select the last few shipping advices used before the physical count and determine whether the shipments were recorded as sales.d. Inspect the open purchase order file for significant commitments to consider for disclosure.arrow_forwardthe auditor picks an item of inventory from the warehouse and determines whether it is included in the entity's list of inventories a. existence b. completeness c. accuracy d. rightsarrow_forward
- Which documents would an auditor most likely choose to examine closely to ascertain that all expenditures incurred during the accounting period have been recorded as a liability?a. invoices b. purchase orders c. purchase requisitions d. receiving reportsarrow_forwardA typical substantive procedure for inventory balance and purchase transactions may include determining whether any inventories have been pledged and reviewing purchase commitment. Which of the following assertions is addressed by the audit procedure previously mentioned? * A. II, III and IV B. II and IV C. IV and VII D. IV, VI and VII E. II, IV, V and VIIarrow_forwardThe auditor computed inventory turnover and compared it to prior years. This substantive test provides evidence regarding the client's Rights to the inventory. Question 1 options: True Falsearrow_forward
- Under the new revenue recognition standard, how is the sale of inventory recorded?arrow_forwardFor each of the accounts balances and associated assertions below, select the audit procedure from the list provided that gives the most appropriate audit evidence for the account assertion. Accounts Balance Assertion Procedure Inventory Completeness a. Examine invoices from suppliers. b. Examine invoices paid after year-end and trace to subsidiary ledger. c. Select items located in the inventory warehouse and trace to the inventory listing. d. Trace sales invoices and shipping documents just after year-end to customer accounts. Cash Rights and obligations a. Agree bank statement to the subsidiary ledger. b. Agree the cash balance per the bank reconciliation to the year-end bank statement. c. Review the bank confirmation for information on compensating balances. d. Trace deposits per the bank statement to the cash subsidiary ledger. Accounts Receivable Existence a. Review confirmation of accounts receivable…arrow_forwardThe auditor observes the client's inventory test counts and locates the items on the client's inventory listing to test for which of the following financial statement assertions? 1. Completeness. 2. Rights and obligations. 3. Allocation and valuation. 4. Understandability and classification. O 1 O 2 O 3 O 4arrow_forward
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