When the Client's Physical Inventory Occurs Before the Last Day

question 63

Multiple Choice

When the client's physical inventory occurs before the last day of the year, it is still necessary to perform an accounts payable cutoff at the time of the count. In addition, the auditor must verify whether all acquisitions taking place between the count and the end of the year were added to:

• A) the physical inventory.
• B) Accounts Payable.
• C) Accounts Payable and Cost of Goods Sold.
• D) the physical inventory and Accounts Payable.

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Definitions:

Compounded Quarterly

A method of calculating interest where the interest is added to the principal amount four times a year.

Present Value

The now value of a future cash sum or chain of cash flows, with a specified rate of return.

Loan Payments

Regular payments made to repay borrowed money, typically including both principal and interest components.

Ordinary General Annuity

A sequence of uniform payments made at consistent intervals, where interest is calculated and added at each period's conclusion.