Chap009 - Chapter 09 Production Cycle Chapter 09 Production...

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Chapter 09 - Production Cycle Chapter 09 Production Cycle Multiple Choice Questions 1. A client's physical count of inventories was higher than the inventory quantities shown in the perpetual records. This situation could be the result of the failure to record A. Sales B. Sales discounts C. Purchases D. Purchase discounts Difficulty: Easy Source: Original 2. The audit procedures used in an observation of the client's physical inventory-taking are designed primarily to A. Test and observe the client's physical count of inventory B. Verify independently the physical counts obtained by the client C. Assist the client in taking test counts of year-end inventory D. Determine whether or inventory contains obsolete goods Difficulty: Medium Source: Original 3. 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? A. Debit Purchases/credit Cost of Goods Sold B. No adjustment is necessary C. Debit Inventory/credit Accounts Payable D. Debit Cost of Goods Sold/credit Accounts Payable Difficulty: Medium Source: Original 9-1
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Chapter 09 - Production Cycle 4. Martinez, CPA, was auditing his client, Marvelous Retail Company. He selected a sample of inventory items from the perpetual records and vouched additions to receiving reports. This procedure was intended to satisfy which POCAOB assertion? A. Rights and obligations B. Completeness C. Existence or occurrence D. Valuation or allocation Difficulty: Easy Source: Original 5. If an auditor wished to test for the existence or occurrence of inventory, he or she would most likely select a sample of inventory item perpetual records and A. Trace additions to the general ledger B. Vouch additions to receiving reports C. Vouch additions to sales invoices D. Trace receipts to receiving reports Difficulty: Easy Source: Original 6. An auditor selected an inventory item on the warehouse floor, test counted it, and traced the count to the final inventory compilation. The auditor most likely was testing the following PCAOB assertion: A. Existence assertion B. Valuation assertion C. Completeness assertion D. Rights and obligations assertion Difficulty: Medium Source: Original 9-2
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Chapter 09 - Production Cycle 7. 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? A. Occurrence B. Completeness C. Rights and obligations D. Valuation Difficulty: Medium Source: Original 8. An auditor selected a product maintained in the finished goods warehouse. The auditor counted the product and compared this amount with the amount in the finished goods perpetual inventory subsidiary account. Which ASB balance assertion is the auditor most likely testing? A.
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Chap009 - Chapter 09 Production Cycle Chapter 09 Production...

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