Audit Planning Requires That the Auditor Consider Possible Inventory Errors

question 13

Essay

Audit planning requires that the auditor consider possible inventory errors or frauds that might occur that could affect the financial statements.For each of the types of inventory errors listed in the following table,indicate what would be the possible effect in the inventory and cost of sales accounts: overstated,understated,or no effect.

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Definitions:

Specific Gravity

A measure of the density of a substance compared to the density of water.

Dehydration

A condition resulting from the excessive loss of body water.

Urinary Diversion

A surgical procedure to redirect urine flow from its normal pathway due to disease or injury, often involving the creation of a stoma on the abdominal wall.

Ileal Conduit

A surgical procedure to create a new path for urine to exit the body after the bladder has been removed, using a segment of the ileum (part of the small intestine).