The overall objective of the audit of the inventory and warehousing cycle is:
A) to determine that errors in the acquisitions and payroll cycles have not impacted on inventory pricing.
B) to determine that inventory is not obsolete.
C) to determine that raw materials, work- in- process, finished goods inventory and cost of goods sold are fairly stated in the financial statements.
D) to determine that raw materials, work- in- process, finished goods inventory and cost of goods sold are accurate.

Question

Quizplus · Accepted Answer

The overall objective of the audit of the inventory and warehousing cycle is to determine that raw materials, work-in-process, finished goods inventory, and cost of goods sold are fairly stated in the financial statements. This includes verifying that inventory is properly valued and that any write-downs or impairments have been correctly accounted for. The audit should also ensure that the physical inventory count is accurate and that there are no material variances between the recorded amounts and the actual quantities on hand. Additionally, the audit should assess the adequacy of the company's internal controls over inventory and warehousing to prevent theft, damage, or loss.

The Overall Objective of the Audit of the Inventory and Warehousing