The Costs Used to Value the Physical Inventory Must Be

question 85

Multiple Choice

The costs used to value the physical inventory must be tested to determine whether the client has correctly followed an inventory method that is in accordance with accounting standards and is consistent with previous years.The audit procedures used to verify these costs are referred to as:

• A) price tests.
• B) cost tests.
• C) compilation tests.
• D) consistency tests.

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Definitions:

Disposal

The process of getting rid of an asset or substance, which can involve selling, recycling, or throwing away.

Book Value

The net value of a company's assets, subtracting liabilities and generally expressed on a per-share basis.

Book Value

The net value of an asset reported on the balance sheet, calculated as the asset's cost minus accumulated depreciation.

Plant Asset

Long-term tangible assets used in the production of goods and services, such as machinery, buildings, and equipment.