Question 1

The production planner determines what inventory is need for future production using

Accepted Answer

A) Finished goods inventory status report for the product being produced. 
B) Bill of materials for the product being produced. 
C) Standard costs for the product being produced. 
D) Manpower availability report from human resources. 
A) Finished goods inventory status report for the product being produced. 
B) Bill of materials for the product being produced. 
C) Standard costs for the product being produced. 
D) Manpower availability report from human resources. B

Question 2

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).

Accepted Answer

The inventory test counts can run from the A.Basic transaction files to perpetual inventory records (completeness assertion). B.Perpetual inventory records to the detail source documents (existence or occurrence assertion).

Question 3

A sample from the perpetual inventory records meets the _____________________________ requirement to determine whether all recorded transactions are supported by reports and documents.
Reference: Question also found in study guide

Accepted Answer

occurrence

Question 4

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

Accepted Answer

A) FIFO. 
B) LIFO. 
C) Average cost. 
D) All of the above are acceptable. 
A) FIFO. 
B) LIFO. 
C) Average cost. 
D) All of the above are acceptable.

Question 5

Materials requisitions should be compared in the __________________________________ department with the ______________________________________ on the production order.
Reference: Question also found in study guide

Accepted Answer

cost accou

Question 6

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

Accepted Answer

A) Quantities on hand have been computed based on acceptable cost accounting techniques that reasonably approximate actual quantities on hand. 
B) Physical inventories agree substantially with book inventories. 
C) The system is in accordance with generally accepted accounting principles and is functioning as planned. 
D) Costs have been properly assigned to finished goods,work-in-process,and cost of goods sold. 
A) Quantities on hand have been computed based on acceptable cost accounting techniques that reasonably approximate actual quantities on hand. 
B) Physical inventories agree substantially with book inventories. 
C) The system is in accordance with generally accepted accounting principles and is functioning as planned. 
D) Costs have been properly assigned to finished goods,work-in-process,and cost of goods sold.

Question 7

Production planning interacts with the preparation of ____________________________________.
Reference: Question also found in study guide

Accepted Answer

The answer of Production planning interacts with the preparation of...

Question 8

Which of the following would be considered an analytical procedure?

Accepted Answer

A) Testing purchasing,shipping,and receiving cutoff activities. 
B) Comparing inventory balances to recent sales activities. 
C) Projecting the deviation rate of a statistical sample to the population. 
D) Reconciling physical counts to perpetual records and general ledger balances. 
A) Testing purchasing,shipping,and receiving cutoff activities. 
B) Comparing inventory balances to recent sales activities. 
C) Projecting the deviation rate of a statistical sample to the population. 
D) Reconciling physical counts to perpetual records and general ledger balances.

Question 9

To gain assurance that all inventory items in a client's inventory listing schedule are valid,an auditor most likely would trace

Accepted Answer

A) Inventory tags noted during the auditor's observation to items in the inventory listing schedule. 
B) Inventory tags noted during the auditor's observation to items listed in receiving reports and vendors' invoices. 
C) Items in the inventory listing schedule to inventory tags and the auditor's recorded count sheets. 
D) Items in receiving reports and vendors' invoices to the inventory listing schedule. 
A) Inventory tags noted during the auditor's observation to items in the inventory listing schedule. 
B) Inventory tags noted during the auditor's observation to items listed in receiving reports and vendors' invoices. 
C) Items in the inventory listing schedule to inventory tags and the auditor's recorded count sheets. 
D) Items in receiving reports and vendors' invoices to the inventory listing schedule.

Question 10

A comparison of the prior year's sales forecast with actual sales may provide an indication of slow moving inventory.

Accepted Answer

A) True 
 B)False

Question 11

The Bill of Materials provides pricing information on all materials used in production.

Accepted Answer

A) True 
 B)False

Question 12

An auditor reviews job cost sheets to test which transaction assertion?

Accepted Answer

A) Occurrence. 
B) Completeness. 
C) Accuracy. 
D) Classification. 
A) Occurrence. 
B) Completeness. 
C) Accuracy. 
D) Classification.

Question 13

Which of the following procedures would be most appropriate for testing the completeness assertion as it applies to inventory?

Accepted Answer

A) Scanning perpetual inventory,production,and purchasing records. 
B) Examining paid vendor invoices. 
C) Tracing inventory items from the tag listing back to the physical inventory quantities. 
D) Performing cutoff procedures for shipping and receiving. 
A) Scanning perpetual inventory,production,and purchasing records. 
B) Examining paid vendor invoices. 
C) Tracing inventory items from the tag listing back to the physical inventory quantities. 
D) Performing cutoff procedures for shipping and receiving.

Question 14

A production order usually includes a ________________________________.
Reference: Question also found in study guide

Accepted Answer

The answer of A production order usually includes a ________________________________.
Reference:...

Question 15

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?

Accepted Answer

A) Complete recounts by independent teams are performed. 
B) Perpetual inventory records are maintained. 
C) Unit cost records are integrated with production accounting records. 
D) Inventory balances are rarely at low levels. 
A) Complete recounts by independent teams are performed. 
B) Perpetual inventory records are maintained. 
C) Unit cost records are integrated with production accounting records. 
D) Inventory balances are rarely at low levels.

Question 16

The cost accounting department at Blue Manufacturing Company receives various types of information at the end of each week.The production floor reports time and production work data directly to the cost accounting department.Also,the payroll department sends labor cost data to the cost accounting department.What is the cost accounting department likely to do with this information? Why?

Accepted Answer

In this situation,the cost accounting de

Question 17

Prepare an audit plan for the observation of an inventory count.

Accepted Answer

Note that other answers are possible. 1.

Question 18

Which of the following auditing procedures probably would provide the most reliable evidence concerning the entity's assertion of rights and obligations related to inventories?

Accepted Answer

A) Trace test counts noted during the entity's physical count to the entity's summarization of quantities. 
B) Inspect agreements to determine whether any inventory is pledged as collateral or subject to any liens. 
C) Select the last few shipping documents used before the physical count and determine whether the shipments were recorded as sales. 
D) Inspect the open purchase order file for significant commitments that should be considered for disclosure. 
A) Trace test counts noted during the entity's physical count to the entity's summarization of quantities. 
B) Inspect agreements to determine whether any inventory is pledged as collateral or subject to any liens. 
C) Select the last few shipping documents used before the physical count and determine whether the shipments were recorded as sales. 
D) Inspect the open purchase order file for significant commitments that should be considered for disclosure.

Question 19

Which of the following steps would not normally be included in a program for a physical inventory observation?

Accepted Answer

A) Vouch unit prices to vendors' invoices or other cost records. 
B) Obtain the client's inventory counting instructions and review them for completeness. 
C) Inspect the tags used and unused and record the tag numbers used. 
D) Obtain the numbers of the last five receiving reports and last five shipping documents. 
A) Vouch unit prices to vendors' invoices or other cost records. 
B) Obtain the client's inventory counting instructions and review them for completeness. 
C) Inspect the tags used and unused and record the tag numbers used. 
D) Obtain the numbers of the last five receiving reports and last five shipping documents.

Question 20

From the auditors' point of view,inventory counts are more acceptable prior to the year end when

Accepted Answer

A) Internal control is weak. 
B) Accurate perpetual inventory records are maintained. 
C) Inventory is slow moving. 
D) Significant amounts of inventory are held on a consignment basis. 
A) Internal control is weak. 
B) Accurate perpetual inventory records are maintained. 
C) Inventory is slow moving. 
D) Significant amounts of inventory are held on a consignment basis.

The production planner determines what inventory is need for future production using

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 sample from the perpetual inventory records meets the _____________________________ requirement to determine whether all recorded transactions are supported by reports and documents. Reference: Question also found in study guide

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

Materials requisitions should be compared in the department with the ____ on the production order. Reference: Question also found in study guide

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

Production planning interacts with the preparation of ____________________________________. Reference: Question also found in study guide

Which of the following would be considered an analytical procedure?

To gain assurance that all inventory items in a client's inventory listing schedule are valid,an auditor most likely would trace

A comparison of the prior year's sales forecast with actual sales may provide an indication of slow moving inventory.

The Bill of Materials provides pricing information on all materials used in production.

An auditor reviews job cost sheets to test which transaction assertion?

Which of the following procedures would be most appropriate for testing the completeness assertion as it applies to inventory?

A production order usually includes a ________________________________. Reference: Question also found in study guide

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?

Prepare an audit plan for the observation of an inventory count.

Which of the following auditing procedures probably would provide the most reliable evidence concerning the entity's assertion of rights and obligations related to inventories?

Which of the following steps would not normally be included in a program for a physical inventory observation?

From the auditors' point of view,inventory counts are more acceptable prior to the year end when

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Audits, Governmental Audits, and Fraud Examinations

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing and Information Technology

Filters

Exam 9: Production Cycle

The production planner determines what inventory is need for future production using

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 sample from the perpetual inventory records meets the _____________________________ requirement to determine whether all recorded transactions are supported by reports and documents. Reference: Question also found in study guide

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

Materials requisitions should be compared in the __________________________________ department with the ______________________________________ on the production order. Reference: Question also found in study guide

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

Production planning interacts with the preparation of ____________________________________. Reference: Question also found in study guide

Which of the following would be considered an analytical procedure?

To gain assurance that all inventory items in a client's inventory listing schedule are valid,an auditor most likely would trace

A comparison of the prior year's sales forecast with actual sales may provide an indication of slow moving inventory.

The Bill of Materials provides pricing information on all materials used in production.

An auditor reviews job cost sheets to test which transaction assertion?

Which of the following procedures would be most appropriate for testing the completeness assertion as it applies to inventory?

A production order usually includes a ________________________________. Reference: Question also found in study guide

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?

Prepare an audit plan for the observation of an inventory count.

Which of the following auditing procedures probably would provide the most reliable evidence concerning the entity's assertion of rights and obligations related to inventories?

Which of the following steps would not normally be included in a program for a physical inventory observation?

From the auditors' point of view,inventory counts are more acceptable prior to the year end when

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Audits, Governmental Audits, and Fraud Examinations

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing and Information Technology

Filters

Materials requisitions should be compared in the department with the ____ on the production order. Reference: Question also found in study guide