Hovington, CPA, knows that while audit objectives relating to inventories may be stated in terms of the assertions as presented in this chapter, they may also be subdivided and stated more specifically. He has chosen to do so and has prepared the second column of the following table.

Required:
Assume that Hovington€™s client, a retail department store, does no production. For each specific inventory audit objective listed above, select the most closely related financial statement assertion and the most appropriate audit procedure from the following:
Audit Procedure
F. Examine current vendors€™ price lists.
G. Review drafts of the financial statements.
H. Select a sample of items during the physical inventory count and determine that they have been included on count sheets.
I. Select a sample of recorded items and examine supporting vendors€™ invoices and contracts.
J. Select a sample of recorded items on count sheets during the physical inventory count and determine that items are on hand.
K. Test reasonableness of direct labor rates.

Financial Statement Assertion
A. Completeness and cutoff
B. Existence or occurrence
C. Presentation and disclosure
D. Rights and obligations
E. Valuation and accuracy
Financial statement assertions and audit procedures may be selected once, more than once, or not atall.

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Financial Statement Assertion Audit Procedure Specific Audit Objective . The entity has legal title to inventories 2. Recorded inventory quantities indude all products on hand 3. Inventories are reduced, when appropriate, to replacement cost or net realizable value. 4. Cost of inventories is properly calculated 5. The major categories of inventories and their basis of valuation are adequately reported in the financial statements.