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

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 means that the inventory is accurately reflected in the financial statements and is not materially misstated. The audit also ensures that there are no errors in the acquisitions and payroll cycles that have impacted the inventory pricing. However, the audit does not specifically aim to determine whether the inventory is obsolete.

The Overall Objective of the Audit of the Inventory and Warehousing