Exam 9: Production Cycle

Periodic or cycle counts of selected inventory items are made at various times during the year rather than during a single inventory count at year-end.Which of the following is necessary if the auditor plans to observe inventories at interim dates?

_____________________________ can be used in connection with knowledge of the shape of management's plans for the year under audit.

In general,the auditors' best opportunity to detect inventory errors and frauds is during the physical observation of the inventory count.

A sample from the source documents meets the _____________________________ requirement to determine whether transactions were actually recorded in the inventory records.

The function of _________________________________ refers to comparing the physical count of inventory to the perpetual inventory records.

An auditor is examining a nonpublic company's inventory procurement system and has decided to perform tests of controls.Under which of the following conditions should the auditor perform tests of controls?

Auditors ______________________________ the inventory taking and make ________________________________,but they seldom _____________________________ the entire inventory.

Which of the following is not an acceptable method of determining inventory cost under GAAP?

An auditor selected items for test counts while observing a client's physical inventory.The auditor then traced the test counts to the client's inventory listing.This procedure most likely obtained evidence concerning management's balance assertion of

Explain briefly the two directions of inventory test counts. A. Basic transaction files to perpetual inventory records (completeness assertion). B. Perpetual inventory records to the detail source documents (existence or occurrence assertion).

A company's cost accountant periodically reconciles job cost sheets to the work-in-process inventory accounts.This reconciliation is most likely performed to provide assurance that

Which of the following would not be an example of an inventory record error or fraud?

When testing a company's cost accounting system,the auditor uses procedures that are primarily designed to determine that

To make a year-to-year comparison of inventory turnover most meaningful,the auditor will perform the analysis

Which of the following methods for determining inventory cost is not allowed by GAAP?

Specific assertions typical of inventory and cost of sales accounts would not include that inventory

Your client counts inventory three months before the end of the fiscal year.Internal controls over inventory are excellent.Which procedure is not necessary for the inventory roll-forward?

Which of the following is an internal control weakness for a company whose inventory of supplies consists of a large number of individual items?

Based on the production orders,management develops a plan for the amount and timing of production.

An auditor's tests of controls over the issuance of raw materials to production would most likely include