Which of the Following Tests Should Be Performed by an Auditor

question 54

Multiple Choice

Which of the following tests should be performed by an auditor to ensure that all completed inventory is physically moved to finished goods and that the inventory records are updated concurrent with the physical movement?

• A) Evaluate whether management's inventory count controls and procedures are appropriate and observe inventory counting to assess whether the procedures are being followed.
• B) Inspect the inventory records for evidence that they have been properly adjusted based on the results of the physical counts.
• C) For a sample of finished goods inventory items, agree the increase in the finished goods inventory records to a corresponding decrease in work-in-process for the same date.
• D) For a sample of finished goods inventory items, agree the increase in the finished goods inventory records to a corresponding decrease in raw materials, purchasing, and payroll.

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Definitions:

Beliefs

Convictions or acceptances that certain things are true or real, often without empirical evidence.

Popular Psychology

An informal approach to understanding the mind and behavior, often found in self-help books and media, rather than in academic psychology or research.

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Empirical Evidence

Information acquired by observation or experimentation that can be used to verify or refute a theory, hypothesis, or claim.