When Auditing Merchandise Inventory at Year-End,the Auditor Performs a Purchase

question 16

Multiple Choice

When auditing merchandise inventory at year-end,the auditor performs a purchase cutoff test to obtain evidence that

• A)All goods purchased before year-end are received before the physical inventory count.
• B)No goods held on consignment for customers are included in the inventory balance.
• C)No goods observed during the physical count are pledged or sold.
• D)All goods owned at year-end are included in the inventory balance.

---

Definitions:

Specialized

Having a particular area of expertise or concentrating on a specific subject, occupation, activity, or field of study.

Basic Function

The fundamental purpose or role that an entity or process serves in a system or organization.

Decision Groups

Are assemblies or teams formed to analyze situations, consider alternatives, and make choices collectively.

Systematic Decision

A decision-making process that follows a methodical and logical approach, often involving steps such as identifying a problem, gathering information, and evaluating alternatives.