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b.valuation and allocation.c.existence.d.rights and obligations.The correct answer is a.Learning objective 16.2 ~ explain the nature of inventory records.12.Cyclical inventory counts differ from full inventory counts in which way?a.Cyclical inventory counts are performed at balance date.b.Cyclical inventory counts are only performed by internal audit.c.Cyclical inventory counts may involve counting only a portion of inventory items.d.They differ in all of the above ways.The correct answer is c.Learning objective 16.2 ~ explain the nature of inventory records.13.ABC Ltd is a retailer who is planning to undertake a full inventory count at year-end. Control risk over inventory records for this entity is deemed to be:a.important due to the timing of the inventory count.b.important due to the nature of the business.c.unimportant due to the timing of the inventory count.d.none of the above.The correct answer is c.Learning objective 16.2 ~ explain the nature of inventory records.
14.The application of analytical procedures to the audit of inventories is often:a.the only procedure necessary.b.a requirement of the standards.c.used extensively.d.not very useful.The correct answer is c.Learning objective 16.2 ~ explain the nature of inventory records.15.Matters that should be considered by the auditor before reaching a conclusion about the reliability of an inventory count include all of the following except:a.the type of accounting package used by the firm.b.the general condition of the inventory.c.departures from the entity’s inventory count.d.all of the above should be considered.The correct answer is a.Learning objective 16.2 ~ explain the nature of inventory records.16.Which of the following is notan income statement account related to property, plant and equipment?a.Accumulated depreciation.b.Loss on disposal of plant.c.Rent on operating leases.d. Depreciation.The correct answer is a.Learning objective 16.3 ~ describe procedures to be followed at an inventory count.17.The auditor identifies the specific audit objective: “determine that property, plant and equipment (PPE) assets represent productive assets that are in use at balance date”. This objective is derived from the:a.existence assertion.
b.completeness assertion.c.presentation and disclosure assertion.d.rights and obligations assertion.The correct answer is a.Learning objective 16.3 ~ describe procedures to be followed at an inventory count.18.The statement about audit strategy for property, plant and equipment that is inaccurateis:a.for depreciation and accumulated depreciation inherent risk is affected by the difficulty in estimating both useful lives and residual value.b.although material, verification of PPE typically involves significantly less time and cost than verification of current assets.