A common inventory observation procedure is to record in the working papers for subsequent follow-up the last shipping document number used at year-end.The audit objective being achieved by this procedure is
A)inventory as recorded exists.
B)existing inventory is counted and tagged.
C)information is obtained to make sure sales and inventory purchases are recorded in the proper period.
D)tags are accounted for to make sure none are missing.

Question

Quizplus · Accepted Answer

The audit objective being achieved by this procedure is to obtain information to make sure sales and inventory purchases are recorded in the proper period. By recording the last shipping document number used at year-end, the auditor can compare it with the subsequent year's shipping documents to ensure that sales and inventory purchases are properly recorded in the current year, and not backdated to the previous year. This helps to ensure that the financial statements are fairly presented and comply with accounting standards.

A Common Inventory Observation Procedure Is to Record in the Working