Exam 21: Audit of the Inventory and Warehousing Cycle

The adequacy of internal controls over the physical count of inventory is one of the key determinants of the amount of time needed to test inventory.

Which of the following is an accurate statement regarding the audit of pricing and compilation of inventory?

A major difficulty in the verification of inventory cost records for the purpose of inventory valuation is in determining the reasonableness of the:

What are the auditor's primary concerns in verifying the transfer of inventory from one location to another?

When a physical count of inventory is performed at an interim date, the auditor observes it at that time and tests the perpetual records for transactions:

The physical counting of inventory may be performed at which of the following times?

When performing price tests for purchased inventory, the auditor would not be concerned with the most recent vendors' invoices if the client uses the FIFO valuation method.

Boxes or other containers holding inventory should also be opened during test counts to determine the ________ of the inventory.

In pricing raw materials in manufactured products, auditors must consider both the unit cost of the raw materials and the number of units required to manufacture a unit of output.

When a client has standard cost records, an efficient and useful method of determining valuation is to review and analyze variances.

Which of the following is not a function within the inventory and warehousing cycle?

From which of the following evidence-gathering audit procedures would an auditor obtain most assurance concerning the existence of inventories?

In order to strengthen controls over cost accounting information, a company should consider implementing:

________ accumulate costs by individual jobs as material is issued into production and labor costs are incurred.

Cost accounting controls are those related to the physical inventory and the consequent costs from the point at which:

When an auditor observes that personnel who are responsible for physically counting inventory are not following the inventory instructions, the auditor should:

In process cost systems, costs are accumulated by individual jobs.

Auditor tests of the physical controls over raw materials, work in process, and finished goods are generally limited to:

The extent and timing of an auditor's physical examination of inventory is significantly influenced by the adequacy of the client's perpetual inventory records.

If the perpetual inventory master files show lower quantities of inventory than the physical count, an explanation of the difference might be unrecorded: