Which of the following is an accurate statement regarding the audit of pricing and compilation of inventory?
A) Inventory compilation tests include all of the tests of the client's unit prices to determine whether they are correct.
B) The review for obsolete inventory should be performed by the accounting department.
C) The most important internal control for accurate unit costs is external verification by an outside consultant.
D) Inventory compilation internal controls are needed to ensure that the physical counts are correctly summarized and priced.

Question

Quizplus · Accepted Answer

Internal controls are necessary to ensure that the inventory compilation, which involves summarizing and pricing physical counts, is accurate. Option A is incorrect because inventory compilation tests do not include all tests of the client's unit prices. Option B is also incorrect because the review for obsolete inventory should be performed by the auditor, not the accounting department. Option C is incorrect because external verification by an outside consultant is not the most important internal control for accurate unit costs.

Which of the Following Is an Accurate Statement Regarding the Audit