When auditing inventories, an auditor would least likely verify that Multiple Choice the financial statement presentation of inventories is appropriate. the client has used proper inventory pricing.
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This means we need to identify the option that is generally *not* a primary focus or is less critical compared to other audit procedures for inventories. Let's analyze each option: * **"the financial statement presentation of inventories is appropriate."** Show more…
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Which of the following statements about the valuation of the inventory is correct, according to PAS 2 Inventories? A. Inventory items are normally valued at the higher of cost and net realizable value. B. The cost of goods manufactured by an entity cannot include overhead costs. C. LIFO (last in, first out) may be used to value inventory in limited circumstances D. Selling price less estimated profit margin may be used to arrive at cost if this gives a reasonable approximation of actual cost.
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The Snake Inc. reported income before taxes of P1,000,000 for 2021 and P1,200,000 for 2022. The company takes its annual physical count of inventory every December 31. Your audit revealed the following information: A. The price used for 4,000 units included in the 2021 ending inventory was P129. The correct cost was P119. B. Goods costing P70,000 was received from a vendor on January 5, 2022. The shipment was made on December 26, 2021 under FOB shipping point term. The purchase was recorded in 2021 but the shipment was not included in the 2021 ending inventory. C. Merchandise costing P100,000 was sold to customer on December 29, 2021. Snake was asked by the customer to keep the merchandise until January 3, 2022, when the customer would come and pick it up. Although the sale was properly recorded in 2021, the merchandise was included in the ending inventory. D. A supplier sold merchandise valued at P140,000 to Snake Inc. The merchandise was shipped FOB shipping point on December 29, 2022 and was received by Snake on December 31, 2022. The purchase was recorded in 2022 and the merchandise was not included in the 2022 ending inventory. Question: The December 31, 2022 inventory is understated by:
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