Which of the following TOC procedures best tests inventory c

Which of the following TOC procedures best tests inventory costs recorded correctly? (Hint: Think of the specific audit objective of valuation) a. Compare inventory on hand with amounts shown in perpetual inventory records. b. Compare the classification of a sample of inventory into raw materials, work-in-progress, and finished goods. c. Analyze cost accounting records and cost variance report for allocation of materials, labor, and overhead. d. Inspect perpetual inventory records for obsolete, slow-moving, or excess quantities.

Solution

Solution: Compare the classification of a sample of inventory into raw materials, work-in-progress and finished goods

Explanation: The three types of inventory accounts associated are raw materials goods, work in process goods and finished goods. There classification are included in the procedures of TOC best tests inventory costs