Trắc nghiệm ôn thi giữa kì Nguyên Lý Marketing 2

CHAPTER 8 AUDIT INVENTORIES AND ACCOUNTS PAYBLE 1/29/2024 1
201106 – Audit Inventories and Accounts Payable LEARNING OBJECTIVES
• Understand the contents and features of Audit
Inventories, Cost of goods sold and Accounts Payable
• Analyze the economic transactions and recognize the
audit risks of material misstatements related to these
components in the financial statements
• Understand the audit process and perform the audit tests for these components 1/29/2024 2
201106 – Audit Inventories and Accounts Payable CONTENTS OF CHAPTER 4 1 Contents and Features 2 Assertions 3 Internal Control 4 Audit Procedure 1/29/2024 3
201106 – Audit Inventories and Accounts Payable Part 1 CONTENTS AND FEATURES 1/29/2024 4
201106 – Audit Inventories and Accounts Payable
CONTENTS OF INVENTORIES
• Inventories studied in this chapter are trading goods that
are purchased from suppliers and sold to customers.
• Inventories studied includes:
 Goods in transit – Account code: 151
 Merchandise goods – Account code: 156
 Outward goods on consignment – Account code: 157
• Inventories are kept under perpetual or periodic inventory system. 1/29/2024 5
201106 – Audit Inventories and Accounts Payable
CONTENTS OF INVENTORIES
• Inventories are measured at the lower of cost and net realizable value (NRV).
• The enterprise should create an allowance for decline in
inventories if it is evident that there is a decrease in NRV
against the original cost of inventories.
• Allowance for decline in inventories – Account code: 2
• Allowance for decline in inventories is a contra-asset account. 1/29/2024 6
201106 – Audit Inventories and Accounts Payable
CONTENTS OF INVENTORIES • Allowance for decline in inventories means an
estimated amount of decline in value of inventories
against book value of inventories.
• Allowance for decline in inventories should be created
according to every kind of goods.
• Allowance for decline in inventories should be created
at the time in which the financial statement is prepared. 1/29/2024 7
201106 – Audit Inventories and Accounts Payable FEATURES OF INVENTORIES
 Value of inventories normally has a great amount and
a significant proportion of total value of current assets.
 Inventories have many various types and the quantity of each type is usually huge.
 Many transactions of inventories which are related to
different types of documents occur in the accounting period.
 Financial statements may be at risk of material
misstatement due to frauds or errors of inventories. 1/29/2024 8
201106 – Audit Inventories and Accounts Payable FEATURES OF INVENTORIES
 Inventories are sensitive to frauds or errors, especially
relating to existence and valuation of inventories.
 There are many methods to evaluate inventories.
 It is difficult to ensure that all inventories are recorded in the correct accounting period.
 It is difficult or complicated to identify NRV of obsolete inventories and create allowance for decline in inventories.
=> Inherent risk of inventories is assessed as high. 1/29/2024 9
201106 – Audit Inventories and Accounts Payable CONTENTS OF ACCOUNTS PAYABLE • On the financial statements, Accounts Payable
normally classified as current liabilities. However, Accounts receivable is presented as non-current
liabilities in some special cases. • Account Code: 331
• This account is used to record payables of and payments to suppliers.
• Payables to suppliers providers should be kept records
in details for every entity. This account also records prepayment to suppliers. 1/29/2024 10
201106 – Audit Inventories and Accounts Payable FEATURES OF ACCOUNTS PAYBLE  The major risk of accounts payable is in
understatement of this account to overstatement of profits.
 Another normal risk of accounts payable is the
valuation of year-end balances of this account.
 It is difficult to ensure that all accounts payable are
recorded in the correct accounting period.
=> Inherent risk of completeness of accounts payble is assessed as high. 1/29/2024 11
201106 – Audit Inventories and Accounts Payable Part 2 ASSERTIONS 1/29/2024 12
201106 – Audit Inventories and Accounts Payable
Assertions about classes of transactions and events  Occurrence  Completeness  Accuracy  Cut-off  Classification 1/29/2024 13
201106 – Audit Inventories and Accounts Payable
Assertions about account balances  Existence  Rights and Obligations  Completeness  Valuation and Allocation 1/29/2024 14
201106 – Audit Inventories and Accounts Payable Part 3 INTERNAL CONTROL 1/29/2024 15
201106 – Audit Inventories and Accounts Payable INTERNAL CONTROL
Objectives of internal controls for inventories
 Define level of reasonable inventories
 Improve flow rate of inventories
 Ensure quality of inventories
 Make sure that inventories are always accessible to the
best sources for the most reasonable prices
 Ensure that inventories are used efficiently and for the right purposes
 Control strictly the inflow and outflow of inventories 1/29/2024 16
201106 – Audit Inventories and Accounts Payable INTERNAL CONTROL
Internal controls for cycle of purchases, inventories and
accounts payable recognition and payments
 Requisition (request) for goods  Approval of request  Suppliers selection  Purchase of goods  Receipt of goods
 Record inventories and accounts payable
 Approval of items for payment  Cash disbursements 1/29/2024 17
201106 – Audit Inventories and Accounts Payable Part 4 AUDIT PROCEDURE 1/29/2024 18
201106 – Audit Inventories and Accounts Payable AUDIT PROCEDURE
- Valuation of internal control - Substantive tests 1/29/2024 19
201106 – Audit Inventories and Accounts Payable VALUATION OF INTERNAL CONTROL
1) Figure out about internal control
2) Valuate preliminarily control risk
3) Design and perform tests of control. Assess whether
the internal control procedures have existed and operated effectively or not?
4) Revaluate control risk and design substantive tests 1/29/2024 20
201106 – Audit Inventories and Accounts Payable