Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

1. Introduction to Accounting

Types of Accounting

Financial Accounting

1. Introduction to Accounting

Types of Accounting

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Multiple Choice

Which of the following procedures would provide the most reliable audit evidence when verifying the existence of inventory?

Physical inspection of inventory by the auditor

Inquiry of management about inventory levels

Examination of internal memos regarding inventory

Review of prior year inventory records

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Verified step by step guidance

Understand the concept of audit evidence reliability: Audit evidence is used to support the auditor's opinion, and its reliability depends on its source and nature. Evidence obtained directly by the auditor is generally more reliable than evidence obtained indirectly.

Evaluate the options provided: The question asks which procedure provides the most reliable evidence for verifying the existence of inventory. Consider the reliability of each option: physical inspection, inquiry of management, examination of internal memos, and review of prior year records.

Analyze 'Physical inspection of inventory by the auditor': This involves the auditor directly observing and verifying the inventory, which is considered highly reliable because it is obtained firsthand.

Analyze 'Inquiry of management about inventory levels': This involves asking management about inventory levels, which is less reliable because it is indirect and depends on management's representations.

Analyze 'Examination of internal memos' and 'Review of prior year inventory records': Both are less reliable because they involve reviewing documents that may not directly confirm the current existence of inventory. Physical inspection remains the most reliable method.