ICAEW ARF · Chapter 7 · Question 7 of 11
An auditor compares the cost of a sample of year-end inventory items with their selling prices after the year end. Which assertion is being tested?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Valuation
Explanation
Inventory must be measured at the lower of cost and net realisable value. Comparing cost with post year-end selling prices, less costs to sell, shows whether any items need writing down below cost. This does not test whether the items exist or whether all items are recorded.
More Assertions and audit evidence MCQs
- Q9Which of the following statements about written representations from management is correct?
- Q10An auditor finds that evidence from a customer confirmation is inconsistent with the client's records. What should the auditor do?
- Q11An auditor uses an independent property valuer as an auditor's expert. Which of the following is the auditor required to do?
- Q1In the context of audit evidence, what do the terms 'sufficient' and 'appropriate' refer to?
- Q2Which of the following sources of audit evidence about a company's bank balance is the most reliable?