Tag: Topic 2

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.

• There are two teams of counters, one counting and one checking.

Select ONE answer:

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

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 – By having two teams of counters involved in the inventory count, there is a check within the inventory counting process that the count is being carried out correctly.
2. Not correct
3. Not correct
4. Not correct

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.

Which ONE of the following procedures would provide evidence of the rights and obligations of motor vehicles?

Select ONE answer:

1. Physical inspection of motor vehicles
2. Vouching a sample of motor vehicles in the asset register to sales brochures
3. Review of purchase invoices for motor vehicles acquired in the period
4. Confirmation that calculations on the non-current asset schedule are correct in respect of motor vehicles

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 – Physical inspection and confirmation of calculations provide evidence of existence and valuation, respectively, as opposed to rights and obligations. The rights and obligations assertion means that the entity holds or controls the rights to assets. Although registration documents show the registered keeper, not the owner, the keeper is likely to have control of the asset. Purchase invoices give evidence of ownership (which gives control).
4. Not correct

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