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The best ascertain that a company has properly included merchandise that it owns in its ending inventory, the auditors should review and test the: A) Purchase cutoff procedures. B) Contractual commitments. C) Purchase invoices received on or around year-end. D) Terms of the open purchase orders. An inventory turnover analysis is useful to the auditor because it may detect: A) The existence of obsolete merchandise. B) Methods of avoiding cyclical holding cost. C) The optimum automatic reorder points. D) Inadequacies in inventory pricing. The most reliable procedure for an auditor to use to test the existence of a client's inventory at an outside location would be to: A) Obtain a confirmation from the client indicating inventory ownership. B) Trace the total on the inventory listing to the general ledger inventory account. C) Analytically compare the current-year inventory balance to the prior-year balance. D) Observe physical counts of the inventory items. An auditor has identified numerous debits to accumulated depreciation of equipment. Which of the following is most likely? A) Plant assets were retired during the year. B) The prior year's depreciation expense was erroneously understated. C) Overhead allocations were revised at year-end. D) The estimated remaining useful lives of equipment were increased. In testing for unrecorded retirements of equipment, an auditor might: A) Select items of equipment from the accounting records and then attempt to locate them during the plant tour. B) Compare depreciation expense with the prior year's depreciation expense. C) Scan the general journal for unusual equipment retirements. D) Trace equipment items observed during the plant tour to the equipment subsidiary ledger