An Auditor Will Usually Trace the Details of the Test

question 82

Multiple Choice

An auditor will usually trace the details of the test counts made during the observation of physical inventory counts to a final inventory compilation.This audit procedure is undertaken to provide evidence that items physically present and observed by the auditor at the time of the physical inventory count are

• A)Owned by the client.
• B)Not obsolete.
• C)Physically present at the time of the preparation of the final inventory schedule.
• D)Included in the final inventory schedule.

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Definitions:

Bilateral Contract

An agreement involving two parties where each side promises to perform a certain duty or pay a specified amount.

Negotiable Instruments

Financial documents that guarantee the payment of a specific amount of money, either on demand or at a set time, and are freely transferable from one party to another.

Recognizances

Formal acknowledgments or commitments, often recorded in legal documents, where an individual pledges to perform an act or adhere to an agreement.

Formal Contracts

Formal contracts are legally binding agreements that require a specific form or method of creation to be enforceable.