The Overall Objective of the Audit of the Inventory and Warehousing

question 84

Multiple Choice

The overall objective of the audit of the inventory and warehousing cycle is to determine that:

• A) errors in the acquisitions and payroll cycles have not impacted on inventory pricing.
• B) raw materials, work-in-process, finished goods inventory, and cost of goods sold are fairly stated in the financial statements.
• C) raw materials, work-in-process, finished goods inventory, and cost of goods sold are accurate.
• D) inventory is not obsolete.

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Definitions:

Cash Budget

A financial plan that estimates cash inflows and outflows over a specific period, helping managers ensure that sufficient cash is available for operations.

Budgeted Sales

The projected amount of sales, often expressed in units or revenue, that a company expects to achieve in a specific period.

Production Budget

An estimate of the total units that must be produced in a given period to meet sales and inventory needs.

Sales Budget

An estimate of the expected sales revenue and selling expenses for a specific period, used for planning and control purposes.