Question

Oceanview's inventory consists primarily of boats and involves a comparatively small lumber of inventory items. How would inventory observation and test count tracing tests differ if the client has a large number of inventory items and the client did not have a detailed list of inventory on hand at the time of the inventory observation

Answer 1

The question is about Audit procedures of inventory that differ if

The Inventory is in small number

- Complete inventory can be counted.

- The inventory is different type of boats each boats market price can be checked separately.

- Floor to record and record to floor can both be tested appropriately.

The Inventory is in large number

- Sample based count.

- The inventory is different type of boats each boats market price can not be checked separately, instead again a sample of inventory will be checked.

- Floor to record and record to floor can be tested on a sample basis.

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