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19 Cards in this Set
- Front
- Back
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bill and hold transactions
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transactions in which sales of merchandise are billed to customers prior to delivery, with the goods being held by the seller. These transactions may overstate revenues and net inccome if they do not meet specific requirements for recognition as sales
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bill of lading
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a document issued by a common carrier acknowledging the receipt of goods and setting forth the provisions of the transportation agreement
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consignment
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a transfer of goods from the owner to another person who acts as the sales agent of the owner
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cost accounting standards board
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a five member board established by congress to narrow the options in cost accounting that are available under generally accepted accounting principles. Companies having significant supply contracts with certain US government agencies are subject to the cost accounting standards established by the board
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job time tickets
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a document diesigned to accumulate the labor and machine time devoted to a particular production order
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master production schedule
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a schedule that is used to plan overall production for a period of time. The schedule illustrates the gross production of each of the company's products
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observation
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the auditors' evidence gathering technique of viewing a client activity to obtain physical evidence of performance
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production order
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a document that authorizes the production of a specific quantity of a product
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purchase commitment
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a contractual obligation to sell goods at fixed prices, entered into well in advance of scheduled delivery dates
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sales commitment
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a contractual obligation to sell goods at fixed prices, entered into well in advance of scheduled delivery dates
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Why is the audit of inventory important?
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1)It is a large item on the balance sheet
2)COGS is a major expense item 3)Inventory evaluation effects COGS which effects income 4) Inventory is very complex |
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How do companys overstate profits?
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Overstate inventory
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Valuation rule for inventory
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lower of cost(FIFO, LIFO) or market(what it can be sold for)
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Which two audit procedures are required?
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Inventory and accounts receivable
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Documents for purchase of goods
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Purchase requisitions, purchase orders
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Docs for receiving and storing goods
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Receiving reports
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Docs for issuing goods
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Material Requisitions
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Docs for production schedule
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Production orders, move tickets, time tickets
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Docs for shipping
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Shipping documents, bill of lading
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