Trgmi.K1

Receipt of ordered materials by the receiving department will generate the completion of a form called the

• A) bill of lading.

• B) receiving report.

• C) materials requisition.

• D) inventory acquisition summary.

 ________ is normally characterized as a difficult and complex account to audit.

• A) Property, plant and equipment

• B) Cash

• C) Inventory

• D) Prepaid insurance

Inventory is a complex area to audit for all except which of the following reasons?

• A) Inventory is often in different locations.

• B) There are several acceptable valuation methods and some entities use different methods for different types of inventory.

• C) Inventory is often the largest account on the balance sheet.

• D) Inventory valuation includes few estimates.

In most manufacturing companies, the inventory and warehousing cycle begins with the

• A) receipt of a customer's order.

• B) completion of production of a customer's order.

• C) initiation of production of a customer's order.

• D) acquisition of raw materials for production.

________ accumulate costs by individual jobs as material is issued into production and labor costs are incurred.

• A) Just-in-time production systems

• B) Job cost systems

• C) Process cost systems

• D) Manufacturing systems

The main difference between job order and process costing systems is that

• A) one accumulates costs by materials issued and the other by labor incurred.

• B) one accumulates costs by individual jobs and the other by particular processes.

• C) one emphasizes costs accumulated in completed products and the other emphasizes costs associated with work-in-process.

• D) one emphasizes costs adding value to the product and the other emphasizes costs incurred because of waste, scrap, and obsolescence.

In the flow of inventory and costs, when work-in-progress is credited, ________ is (are) debited.

• A) raw materials

• B) cost of goods sold

• C) finished goods

• D) direct labor

From which of the following evidence-gathering audit procedures would an auditor obtain most assurance concerning the existence of inventories?

• A) observation of physical inventory counts

• B) written inventory representations from management

• C) confirmation of inventories in a public warehouse

• D) auditor's recomputation of inventory extensions

Which of the following audit tests would be regarded as a test of controls?

• A) comparison of the inventory pricing to vendors' invoices

• B) tests of the signatures on canceled checks to board of directors' authorizations

• C) tests of the additions to property, plant, and equipment by physical inspections

• D) review of the specific items making up the balance in a given general ledger account

Which of the following audit tests form the basis for an auditor's report on internal control over financial reporting?

• A) analytical procedures

• B) tests of transactions

• C) tests of controls

• D) tests of details of balances