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Exam 9: Production Cycle

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Question 51

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Forecasts of the following year can be used in connection with valuing the inventory at lower of cost or market,which influences the amount of cost of goods sold that is shown in the financial statements.

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Question 52

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Most businesses try to estimate sales levels and seasonal timing and then try to plan production schedules to meet customer demand.

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Question 53

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When inventory is counted on a date other than the balance-sheet date,no additional procedures would normally be required to satisfy generally accepted auditing standards.

Prepare an audit plan for the observation of an inventory count.

________________________________ are used by the purchasing department to place orders for materials.

Mary Monitor,CPA,noted that ABC Co.received goods prior to year-end that were included in physical inventory but had not been recorded.In this case,which of the following adjustments should be made?

If inventory located off the client's premise,the auditor might confirm the amount with the custodian to satisfy evidence requirements.

An auditor selected an invoice for a large inventory purchase and vouched the invoice to the receiving report.Which ASB transaction assertion is the auditor most likely testing?

To test the control assertion of completeness in the area of work-in-process inventory,the auditor most likely would

While observing a client's annual physical inventory,an auditor recorded test counts for several items and noticed that certain test counts were higher than the recorded quantities in the client's perpetual records.This situation could be the result of the client's failure to record

An auditor will usually trace the details of the test counts made during the observation of physical inventory counts to a final inventory compilation.This audit procedure is undertaken to provide evidence that items physically present and observed by the auditor at the time of the physical inventory count are

Which cycle is not directly linked to the production cycle?

Auditors record the last bill of lading used at the time of the inventory count to

Production planning interacts with the preparation of ____________________________________.

The physical observation procedures for inventory are principally designed to audit for the balance assertions of ____________________________,____________________________,and ____________________________.

An auditor most likely would make inquiries of production and sales personnel concerning possible obsolete or slow-moving inventory to support management's financial statement (PCAOB) assertion of

Inventory observation may need to be scheduled on the year-end date,making a large number of test counts if the test of controls ________________________________.

Selecting a sample of cost accounting reports for labor and vouching it to time records is a procedure designed to test the ASB transaction assertion of