Which of the following is an appropriate substantive test of details of account balances for the inventory cycle for the verification of an accurate cutoff?
A) Test movements between raw materials, work-in-process, and finished goods by selecting transactions from the inventory records and examining supporting documents.
B) Reperform calculations testing mathematical accuracy including total extensions of price and quantity and unit or batch aggregations.
C) Examine shipping documents for a few days before and after year end and trace to inventory records, agreeing for proper inclusion and exclusion.
D) Review and recalculate client's analysis supporting adjustments resulting from the physical inventory count.

Question

Quizplus · Accepted Answer

An appropriate substantive test of details of account balances for the inventory cycle for the verification of an accurate cutoff is to examine shipping documents for a few days before and after year end and trace to inventory records, agreeing for proper inclusion and exclusion. This will help ensure that all inventory transactions have been properly recorded in the correct period, which is critical for accurate financial reporting. Choices A, B, and D are also important tests, but they do not directly address the cutoff issue.

Which of the Following Is an Appropriate Substantive Test of Details