The auditor observes the client's inventory test counts and locates the items on the client'sinventory listing to test for which of the following financial statement assertions?1. Completeness.2. Rights and obligations.3. Allocation and valuation.4. Understandability and classification.O 1O 2O 3O 4

Financial statements refer to the collection of all the balance sheets, income statements, etc to…

Answered: 3. Allocation and valuation. 4.…

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter11: Auditing Inventory, Goods And Services, And Accounts Payable: The Acquisition And Payment Cycle

Section: Chapter Questions

Problem 32RQSC

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Similar questions

An auditor would vouch inventory on the inventory status report to the vendor’s invoice toobtain evidence concerning management’s balance assertions abouta. Existence.b. Rights and obligations.c. Completeness.d. Valuation
As part of your audit of a client's inventory balance, you created an expectation of what should be the inventory balance by using the gross profit method. The difference between your expectation using the gross profit method of estimating inventory as against the client reported balance is above audit materiality level for audit of inventory. What should you do next? a. Discuss with the management the implication of the significant difference and propose an adjusting journal entry accordingly.b. Extend audit procedures by doing further analytical procedures on the inventory balance.c. Extend audit procedures by doing test of details of the account balance.d. Issue a qualified opinion on the basis of a material misstatement in the client's inventory.e. None of the above
By conducting which of the following steps, the auditor can obtain sufficient and appropriate audit evidence regarding existence of inventory, when the inventory is under the custody and control of third party and the auditor considers it material to the Financial statements a) Request confirmation from the third party b) Perform inspection if possible c) Auditor can take an expert advise d) Include it in the Auditors Opinion a) , b) and c) only Only d) Both a) and b) Only a) Only b)

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3. Allocation and valuation. 4. Understandability and classification. 1, 2.