Which of the Following Procedures Would an Auditor Most Likely

question 215

Multiple Choice

Which of the following procedures would an auditor most likely perform to obtain assurance that slowmoving and obsolete items included in inventories are properly identified?

• A) Testing shipping and receiving cutoff procedures.
• B) Confirming inventories at locations outside the entity's premises.
• C) Examining an analysis of inventory turnover.
• D) Tracing inventory observation test counts to perpetual listings.

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Definitions:

Implied Warranty

A legal concept that guarantees a product or service will meet certain expectations of quality and functionality even if not explicitly stated.

Warranty of Merchantability

An implied guarantee that a product will meet the reasonable expectations of the buyer, including being fit for the purpose for which it was sold.

Business of Selling

The activity or profession of promoting and exchanging goods or services for money.

Title Warranties

Legal guarantees provided by a seller to a buyer that they possess a clear and unencumbered title to the property or goods being sold.