It is the auditor's job to review the client's estimate of obsolete inventory to evaluate whether the ending inventory balance has been determined in accordance with the applicable financial reporting framework.To do this,the auditor considers whether the inventory balance includes
A)only inventory the client expects to sell in the future
B)inventory that the client does not own
C)inventory that has not been paid for at the end of the year
D)inventory valued at the lower of cost or market
E)both A and C
F)both A and D
G)both D and E

Question

Quizplus · Accepted Answer

The auditor should consider whether the inventory balance includes only inventory the client expects to sell in the future (answer A) and whether it is valued at the lower of cost or market (answer D). Option E is incorrect because the question does not mention anything about inventory that has not been paid for. Option B is incorrect because the inventory under consideration is obsolete inventory, which by definition belongs to the client. Option C is irrelevant to the question. Therefore, F is the best choice.

It Is the Auditor's Job to Review the Client's Estimate