CAS for Audit Procedures for Inventory Indicate That the Auditor

question 52

Multiple Choice

CAS for audit procedures for inventory indicate that the auditor

• A)must count the inventory.
• B)must be present at the inventory count and must receive adequate documentation from the client regarding the effectiveness of inventory-taking.
• C)must be present at the inventory count and evaluate the methods followed in the determination of quantities and values.
• D)need not be present at the count but must review the methods followed in the determination of quantities and values.

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Definitions:

Operating Departments

The divisions within a company where the primary functions related to the production of goods or provision of services are carried out.

Direct Method

An accounting approach used to allocate service department costs directly to producing departments without considering services rendered between service departments.

First-In, First-Out

An inventory valuation method where the oldest stock is sold or used first.

Weighted-Average Methods

An inventory costing method that calculates the cost of goods sold and ending inventory based on the average cost of all units available during the period.