One of the Auditor's Primary Concerns in Verifying the Transfer

question 59

Multiple Choice

One of the auditor's primary concerns in verifying the transfer of inventory from one location to another is that

• A) recorded transfers exist.
• B) all actual transfers are recorded.
• C) the quantity, date, and description of all recorded transfers are accurate.
• D) all of the above.

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Definitions:

Net Realizable Value

The estimated selling price of an item of inventory less any direct costs of disposal, such as sales commissions.

Allowance for Doubtful Accounts

A contra-asset account representing estimated uncollectible accounts receivable due to the customer's inability to pay.

Accounts Receivable

Money owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Direct Write-off

A method for recognizing bad debt expense when a specific account receivable is determined to be uncollectible, directly reducing accounts receivable and recognizing the expense.