Month: September 2026

The following describes a feature of the inventory count instructions for Alex Manufacturing Ltd.

For the feature, select whether it represents a strength, a deficiency, it depends on the size of the business, or it should be referred to a more senior auditor.

• Inventory sheets are completed in pencil.

Select ONE answer:

1. Consult a senior colleague
2. Depends on the size of the business
3. Strength
4. Deficiency

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct – Count sheets should be completed in pen so that there is a permanent record.

This work is licensed under a Creative Commons Attribution 4.0 International License.

The following describes a feature of the inventory count instructions for Alex Manufacturing Ltd.

For the feature, select whether it represents a strength, a deficiency, it depends on the size of the business, or it should be referred to a more senior auditor.

• The inventory count is performed by warehouse staff and supervised by the warehouse manager.

Select ONE answer:

1. Consult a senior colleague
2. Depends on the size of the business
3. Deficiency
4. Strength

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct – The inventory count should involve personnel who are independent of the warehouse staff.
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

For the following circumstance described in respect of inventory, select which financial statement assertion would be affected.

• Due to a miscalculation of cost, some inventory items have been included at cost even though the net realisable value is lower.

Select ONE answer:

1. Completeness
2. Accuracy, valuation and allocation
3. Cut-off
4. Net Realisable Value

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct – The accuracy, valuation and allocation assertion is affected by miscalculations of cost and the not writing down of damaged items (i.e., inventory is incorrectly valued).
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

For the following circumstance described in respect of inventory, select which financial statement assertion would be affected.

• Inventory items were excluded from the total in the financial statements in error.

Select ONE answer:

1. Completeness
2. Accuracy, valuation and allocation
3. Cut-off
4. Net Realisable Value

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct – The completeness assertion is affected by the omission of inventory items (i.e., inventory is not complete).
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

For the following circumstance described in respect of inventory, select which financial statement assertion would be affected.

• Damaged inventory items have not been written down to net realisable value.

Select ONE answer:

1. Net Realisable Value
2. Completeness
3. Cut-off
4. Accuracy, valuation and allocation

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct – The cut-off assertion is affected by including inventory sold in inventory at the end of the period (i.e., cut-off is incorrect). Where damaged items have not been written down to NRV, then the accuracy, valuation and allocation assertion is directly affected (i.e., inventory is incorrectly valued).

This work is licensed under a Creative Commons Attribution 4.0 International License.