Auditing the Valuation Assertion for Inventory of a Client Utilizing

question 13

Multiple Choice

Auditing the valuation assertion for inventory of a client utilizing the FIFO cost flow assumption will require the auditor to examine which of the following?

• A) Invoices representing the more recent purchases of inventory.
• B) Invoices representing the purchase of base year inventory in the year of inception.
• C) Shipping documents for a sample of cost of goods sold transactions during the year.
• D) Shipping documents for a sample of units on hand in the interim period.

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Definitions:

Self-Employment Income

Earnings derived from one's own business, trade, or profession rather than from salaried employment.

Schedule C

This is a tax form used by sole proprietors in the United States to report their business income and expenses.

1099-MISC

A tax form used to report miscellaneous income, including fees, royalties, or rent, paid to a non-employee.

Self-Employment Tax

A levy that encompasses Social Security and Medicare contributions, mainly targeted at individuals who are self-employed.