Which of the following control activities would most likely be used to maintain accurate perpetual inventory records?

Related Questions

• Q53:

  Observing an entity's inventory held on consignment by others tests the assertion of: A)existence. B)completeness. C)valuation. D)rights and obligations.

• Q54:

  Purchase cutoff activities should be designed to test that merchandise is included in the inventory of the entity company if the company: A)has paid for the merchandise. B)has physical possession of the merchandise. C)holds legal title to the merchandise. D)holds the shipping documents for the merchandise issued in the company's name.

• Q55:

  For several years, an entity's physical inventory count has been lower than what was shown on the books at the time of the count so that downward adjustments to the inventory account were required. Contributing to the inventory problem could be weaknesses in internal controls that led to the failure to record some: A)purchases returned to vendors. B)sales returns received. C)sales discounts allowed. D)cash purchases.

• Q56:

  When an auditor tests an entity's cost accounting system, the auditor's tests are primarily designed to determine that: A)quantities on hand have been computed based on acceptable cost accounting techniques that reasonably approximate actual quantities on hand. B)physical inventories are in substantial agreement with book inventories. C)the system is in accordance with generally accepted accounting principles and is functioning as planned. D)costs have been properly assigned to work in process, finished goods, and cost of goods sold.

• Q57:

  In order to efficiently establish the correctness of the accounts payable cutoff, an auditor will be most likely to: A)coordinate cutoff tests with physical inventory observation. B)compare cutoff reports with purchase orders. C)compare vendors' invoices with vendors' statements. D)coordinate mailing of confirmations with cutoff tests.

• Q59:

  When outside firms of non-accountants specializing in physical inventory counts are used to count, list, price, and subsequently compute the total dollar amount of inventory on hand at the date of the physical count, the auditor will ordinarily: A)consider the report of the outside inventory firm to be an acceptable alternative procedure to the observation of physical inventories. B)make or observe some physical counts of the inventory, recompute certain inventory calculations, and test certain inventory transactions. C)increase the extent of work on the physical count of inventory. D)consider the reduced audit effort with respect to the physical count of inventory as a scope limitation.

• Q60:

  The accuracy of perpetual inventory records may be established, in part, by comparing perpetual inventory records with: A)purchase requisitions. B)receiving reports. C)purchase orders. D)vendor payments.

• Q61:

  The audit of inventory is often the most involved aspect of an audit. Describe at least three inherent risk factors that affect the audit of inventory.

• Q62:

  State the six functions that make up the inventory management process. For each function, identify the related documents and/or records that would be used by a manufacturing company.

• Q63:

  Explain the importance of observing physical inventory during an audit.