pter 15 Inventory eycle-Tests of controls and tests of balances recorded correctly? (Hint: Which of the following TOC procedures best tests inventory costs Think of the specific audit objective of valuation) a. Compare inventory on hand with amounts shown in perpetual inventory records. b. C ompare the classification of a sample of inventory into raw materials, work-in-progress, and finished goods. c. Anal lyze cost accounting records and cost variance report for allocation of materials, labor, and overhead. d. Inspect perpet ual inventory records for obsolete, slow-moving, or excess quantities. 2. Which of the following statements concerning TOC of a client's cost accounting appropriate? The auditor's procedures must be designed to vouch quantities of direct materials charged to a. jobs or processes to materials requisitions. b. The auditor's procedures must not be designed to fit a variety of a client's cost accounting system, even in the same industry The auditor's c. procedures must be designed to determine that costs are appropriately valuated and allocated to specific jobs or processes. d. The auditor's procedures must be designed to analyze a number of the manufacturing overhead subsidiary ledger accounts and verify the propriety of the charges thereto After observing physical inventory count, an auditor performs compilation procedures to test for the specific audit objective of 3. a. existence or occurrence. b. accuracy c. completeness. d. valuation and allocation. ent maintains a perpetual inventory system and inventory is counted on a statistica When a cli sampling basis throughout the financial year, the auditor must 4. a. perform limited test count. b. be present at some of the inventory counts understand the client's sampling plan and evaluate its appropriateness. d. conduct a, b, and c above