The Auditor Recounts the Client's Inventory Count To

question 34

Multiple Choice

The auditor recounts the client's inventory count to:

• A) ensure that none is lost or intentionally omitted (completeness).
• B) ensure that inventory is counted accurately (accuracy)
• C) obtain proper cutoff information for sales and acquisitions (cutoff).
• D) confirm that inventory as recorded on tags exists (existence).

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Definitions:

Allowance Method

An accounting technique used to account for bad debts, where estimated uncollectible accounts are expensed, adjusting the accounts receivable balance.

Accounts Receivable

Outstanding payments due to a company from its customers for delivered or utilized goods and services.

Bad Debt Expense

An estimate of loss due to customers' inability to make payments, recognized as an expense in accounting.

Allowance Method

An accounting technique used to estimate and account for doubtful accounts, providing an allowance for accounts receivable that may not be collectible.