Accounting · Audit Procedures and Inventory Valuation
Which of the following audit procedures are VALID or NOT VALID in relation to Event 1 (an adjusting event regarding inventory valuation and supplier solvency)? 1. Obtain confirmation from the insurer of the amount recoverable under the policy. 2. Inspect correspondence with the supplier concerning their solvency. 3. Recalculate the net realisable value estimate for the inventory. 4. Review post-year-end physical inventory counts of mattresses. 5. Inspect subsequent cash receipts from the sale of defective inventory.
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1VALID = 2, 3, 5; NOT VALID = 1, 4
- 2VALID = 1, 4, 5; NOT VALID = 2, 3
- 3VALID = 4, 5; NOT VALID = 1, 2, 3
- 4VALID = 1, 2, 3; NOT VALID = 4, 5✓
Correct answer
VALID = 1, 2, 3; NOT VALID = 4, 5
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