In an Audit of Inventories, an Auditor Would Least Likely

question 53

Multiple Choice

In an audit of inventories, an auditor would least likely verify that

• A) All inventory owned by the entity is on hand at the time of the count.
• B) The entity has used proper inventory pricing.
• C) The financial statement presentation of inventories is appropriate.
• D) Damaged goods and obsolete items have been properly accounted for.

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Definitions:

Merchandise Inventory

The goods a company holds for the purpose of sale to customers in the normal course of business.

Net Realizable Value

The estimated selling price of goods minus the cost of their sale or disposal, reflecting the actual cash value of inventory.

Accounts Receivable

The sum customers owe a corporation for goods or services delivered but not yet compensated.

Credit Balance

A situation in an account where the sum of credits exceeds the sum of debits.