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

question 11

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)goods held on consignment for customers are not included in the inventory balance
• C)the stock of inventory on hand at year-end is neither pledged nor sold
• D)all goods owned at year-end are included in the inventory balance

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Definitions:

Total Interest Earned

The cumulative amount of interest received from an investment over a particular period.

Original Investment

The initial amount of money put into an investment or project, serving as the baseline for measuring future earnings or losses.

Nominal Interest Rate

The interest rate before adjustments for inflation, as opposed to the real interest rate.

Periodic Interest Rate

The interest rate applied to a loan or investment for a specific period, usually shorter than a year.