Which of the Following Audit Procedures Probably Would Provide the Most

question 853

Multiple Choice

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

• 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 advices 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.

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Definitions:

Automobiles

Motor vehicles designed and manufactured to transport individuals or small groups of people.

Oranges

A citrus fruit known for its juicy segments and sweet to slightly sour taste, often consumed fresh or squeezed for juice.

Peaches

A sweet, juicy fruit with fuzzy skin and a stone or pit in the center, commonly eaten fresh or used in cooking and baking.

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen, representing the cost of sacrificing the next best choice.