ICAEW ARF · Chapter 6 · Question 7 of 11
Which of the following controls mainly addresses the valuation of inventory, rather than its existence or completeness?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Regular review of inventory ageing reports, with old or slow-moving lines considered for write-down
Explanation
Inventory must be measured at the lower of cost and net realisable value, so slow-moving or obsolete lines may need writing down. Ageing reviews identify these items, which addresses valuation. Counts from records to the warehouse address existence, matching goods received notes addresses completeness, and access restrictions safeguard the inventory.
More Controls over payroll, inventory and cash MCQs
- Q9Which control over cash received in the post is most effective?
- Q10Which of the following describes an imprest system for petty cash?
- Q11Which of the following controls is most likely to detect 'teeming and lading' by a receivables clerk?
- Q1Which control best reduces the risk of fictitious ('ghost') employees being added to the payroll?
- Q2Which control best reduces the risk of hourly paid staff being paid for hours they did not work?