Purchase Solution

Inventories & Cost of Goods Sold

Not what you're looking for?

Ask Custom Question

Ace Corporation does not conduct a complete annual physical count of purchased parts and supplies in its principal warehouse, but uses statistical sampling instead to estimate the year-end inventory. Ace maintains a perpetual inventory record of parts and supplies and believes that statistical sampling is highly effective in determining inventory values and is sufficiently reliable so as to make a physical count of each item of inventory unnecessary.

a. Identify the audit procedures that should be used by the independent auditor that change or are in addition to normal required audit procedures when a client utilizes statistical sampling to determine inventory value and does not conduct a 100 percent annual physical count of inventory items.
b. List at least 10 normal audit procedures that should be performed to verify physical quantities whenever a client conducts a periodic physical count of all or part of its inventory.

Purchase this Solution

Solution Summary

This solution identifies the audit procedures and explains four things an auditor must ascertain and ten things an auditor must do. Full explanations are included and specific tasks are explained.

Solution Preview

Identify the audit procedures that should be used by the independent auditor that change or are in addition to normal required audit procedures when a client utilizes statistical sampling to determine inventory value and does not conduct a 100 percent annual physical count of inventory items.

Auditor has to ascertain following things:
1. To ensure that samples are representative of whole lot. The appropriateness of assumptions of the procedure should be verified from the available record of material and how the samples were taken from that material.
2. The statistical parameters are ...

Purchase this Solution


Free BrainMass Quizzes
Operations Management

This quiz tests a student's knowledge about Operations Management

Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.

Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.