Why is inherent risk for the existence of inventory an issue in the expenditure cycle audit?

Q: How is the cost of ending inventory determined when pools are used?

A: A LIFO inventory pool is a method under which the individual units having same physical similarities…

Q: How might an auditor use a client’s sales forecast for general familiarity with the production cycle…

A: Production Cycle:   The process that accounts the conversion of raw materials to work-in-progress…

Q: When verifying debits to the perpetual inventory records of a nonmanufacturing company, auditors…

A: Perpetual Inventory Records:   A process of accounting that constantly updates its records with…

Q: What is the concept of material inventory error?

A: Raw materials inventory: Raw material inventories are the primary materials which are used in the…

Q: An auditor most likely would analyze inventory turnover rates to obtain evidence concerning…

A: Inventory turnover rate is the rate which shows how many times a company has sold and replaced it's…

Q: Discuss how EDI creates an environment in which sensitive information, such as inventory amounts and…

A: Electronic Data Interchange: Electronic data interchange (EDI) is the channel between the computer…

Q: Discuss how the inventory process supports the production planning process and the risk to the…

A: The term inventory control process includes overseeing things from the second they are ordered all…

Q: Which of the following automated application controls would offer reasonable assurancethat inventory…

A: Auditing is a gathering of information and evaluation of evidence as to report on the degree of…

Q: Distinguish among tests of details of balances, tests of controls,and substantive tests of…

A: Substantive Testing: It is an audit procedure that helps examine the supporting documents and…

Q: What is inventory blanket lien?

A: Lien: Lien is a lawful right in contradiction of assets that are usually utilized as security to…

Q: d. Inappropriate Assignment of Labor Costs to Inventory A company having difficulty meeting profit…

A: Analytical procedures are the methods used by the auditors to find out the plausible differences…

Q: What are the different risks associated in the accounting of inventories?

A: Answer: Inventories are the current assets of the company which are realizable within 12 months from…

Q: What is inventory conversion period?

A: Conversion period refers to the length of period at which one asset is converted into another form.…

Q: What is the purpose of analytical reviews in the audit of revenue cycle accounts? Please give an…

A: An analytical review is used by auditors to assess the reasonableness of account balances. A CPA…

Q: Discuss the possibility of substantial misstatement throughout the revenue and collection cycle,…

A: This question explains about  the revenue and collection cycle, with an emphasis on erroneous…

Q: what are the objectives of eliminating the receiving function. What accounting/audit problems need…

A: Receiving Department:   The receiving department is in obligation of inspection and the receiving…

Q: What is tolerable misstatement? How do auditors use it when deciding whether account balancesare…

A: A Tolerable misstatement is the financial statement item amount that differs from the correct amount…

Q: How should an auditor test for proper authorization in the expenditure cycle?

A:

Q: Explain why you agree or disagree with the following statement:“In most audits, it is more important…

A: I agree with the given statement as in most audits, it is much important to test carefully the…

Q: Provide two inherent risk factors in the revenue cycle and identify the accounts that are likely to…

A: RCM (revenue cycle management) is a procedure used by healthcare systems in the United States and…

Q: Of what merit is the contention that the allowance methodlacks the objectivity of the direct…

A: Direct write-off method: This method does not make allowance or estimation for uncollectible…

Q: You are testing inventory.  You determined that inventory exists, nothing is missing from inventory,…

A: The following are some examples of inventory risks: Due to the difficulty of valuing inventory, it…

Q: Discuss the risk of material misstatement in the revenue and collection cycle, with a specific focus…

A:

Q: what is the importance of each assertion in the audit of inventories

A: Audit of inventory has the following assertions which are enumerated as below:

Q: Why is it important to emphasize the existence assertion when auditing accounts receivable?

A:

Q: Explain Inventory Estimation Techniques.

A: Inventory Estimation Techniques:

Q: Your audit client is under intense pressure to meet an earnings target. Which transaction assertion…

A: There are various types of transaction assertions. These includes; Accuracy, Completeness,…

Q: Under what circumstances would an auditor choose to confirminformation such as the right of return…

A: The right of return is the right to the customer to return the product to the supplier. The goods…

Q: When evaluating inventory controls, an auditor would be least likely toa. Inspect documents.b. Make…

A: Auditing:   In auditing, auditors verify the correctness and fair presentation of financial…

Q: What are some of the possible costs that could result from a revision of an accounting standard?

A: Financial Accounting Standards Board (FASB):   It is a private, non-profit organization which is a…

Q: the auditor picks an item of inventory from the warehouse and determines whether it is included in…

A: Management assertions are the claims made by executives regarding certain aspects of a business. The…

Q: Explain the importance of proper credit approval for sales. Whateffect do adequate controls in the…

A: Auditing is a process which is used by audit professionals to review or analyze the transactions and…

Q: What items could indicate a significant risk of fraud in the acquisition and expenditure cycle…

A:

Q: At the completion of an inventory observation, the controllerrequested the auditor to give him a…

A: Given case is: At the completion of an inventory observation, the controller requested the auditor…

Q: How can we prevent inventory from being reordered automatically each time the system detects a low…

A:

Q: Discuss how EDI dealing with sensitive information, such as inventory amounts and price data, is no…

A: Electronic Data Interchange: Electronic data interchange (EDI) is the channel between the computer…

Q: Why do auditors focus on completeness of expenditures as a significant account and relevant…

A: Management assertions are the facts which are applied by the management while preparing the…

Q: In the expenditure cycle, the control procedure of comparing inwards goods documents to vendor…

A: Solution : Correct answer are               -failure to take advantage of discounts for prompt…

Q: A serious exposure for an organization that is connnected with the revenue cycle is the loss of…

A: In this question we asked about a serious exposure for an organization that is connnected with the…

Q: which six key factors commonly contribute to the risk of misstatement of the assertion of inventory?

A: The wrong information or incorrect accounting information represented in the financial statement is…

Q: Discuss how the inventory process supports the production planning process and the risks to the…

A: Accounting Information System (AIS) is said to be the specialized subsystem of the Information…

Q: An auditor discovered the following errors and irregularities while performing tests of controls:…

A: 1. An effective internal control system for inventory will include all procedures and actions that…

Q: How do you assess the risk of material misstatement associated with the audit of inventories?

A: Answer: When auditor performs the audit procedures, there is always the risk of misstatement and…