Tobias Appel Is Trying to Ensure That He Can Review

question 21

Multiple Choice

Tobias Appel is trying to ensure that he can review controls over purchasing transactions. In addition, he would like to substantiate the dollar amounts he is reviewing. What type of procedures can he perform that will provide evidence as to whether a control is effective as well as if an item is being recorded properly?

• A) statistical sampling
• B) dual purpose tests
• C) test of balances
• D) test of controls

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Definitions:

Lost Inventory

Inventory that is unaccounted for due to theft, damage, or error, leading to discrepancies in stock records.

Gross Profit Method

The Gross Profit Method estimates the cost of goods sold and the ending inventory value by applying the company's average gross profit percentage to its net sales.

Lower Of Cost

An accounting principle that values inventory at the lower of its historical cost or market value.

LIFO Inventory

Last-In, First-Out inventory method, where the most recently produced items are recorded as sold first.