Which of the following procedures will usually be performed by the auditor to actively determine obsolete inventory?
A)Confirmation of inventory with customers.
B)Footing the inventory subsidiary ledger.
C)Tracing inventory ordered by the client to receiving reports.
D)Analysis of inventory turnover and sales reports.

Question

Quizplus · Accepted Answer

The analysis of inventory turnover and sales reports is the most effective method to determine if inventory may be obsolete. If a company has excessive amounts of inventory on hand or slow inventory turnover, this may indicate obsolete inventory. Confirmation of inventory with customers, footing the inventory subsidiary ledger, and tracing inventory ordered by the client to receiving reports may provide some information about the inventory but are unlikely to reveal obsolete inventory.

Which of the Following Procedures Will Usually Be Performed by the Auditor