How Does the Auditor Gather Evidence During the Physical Inventory

question 62

Multiple Choice

How does the auditor gather evidence during the physical inventory count?

• A)The auditor determines that the items on hand that are not owned by the client are counted.
• B)The auditor begins the test count process after the client has finished counting the inventory.
• C)Management determines if all inventory has been tagged and counted.The auditor asks management if this task has been done.
• D)The auditor determines whether the inventory count tags are properly controlled and that all count tags are returned.

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Definitions:

Operating Activities

Operating Activities involve the primary day-to-day actions related to producing and delivering a company's products or services, influencing cash flow and operating income.

Net Income

The total earnings of a company after all expenses and taxes have been subtracted from total revenue.

Balance Sheet

A financial statement that provides a snapshot of a company's financial position at a specific point in time, detailing assets, liabilities, and shareholders' equity.

Financing Activities

Transactions and events that affect the long-term liabilities and equity of a company, including issuing stocks, paying dividends, and borrowing loans.