For Which of the Following Tests Would the Auditor Use

question 25

Multiple Choice

For which of the following tests would the auditor use generalised audit softwareto test the completeness assertion of inventory?

• A)Identification of inventory items which haven't been sold for three months.
• B)A sequence check looking for missing purchase invoice numbers.
• C)A sequence check looking for duplicate purchase invoice numbers.
• D)Selecting items from the inventory records in order to trace back to physical inventory counts.

---

Definitions:

Absorption Costing

A method of inventory costing that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overheads - in the cost of a unit of product.

Contribution Format

A financial statement layout that separates fixed costs from variable costs to highlight the contribution margin of a business.

Absorption Costing

A financial tracking method that brings together all costs of production—direct materials, direct labor, and all overhead, both variable and fixed—inclusion in the price of a product.

Variable Costing

An accounting method that includes only variable production costs (materials, labor, and overhead) in product costs.