AICPA Exam CPA-Auditing Topic 1 Question 85 Discussion

Actual exam question for AICPA's CPA-Auditing exam

Question #: 85
Topic #: 1

While observing a client's annual physical inventory, an auditor recorded test counts for several items and noticed that certain test counts were higher than the recorded quantities in the client's perpetual records.

This situation could be the result of the client's failure to record:

APurchase discounts.

BPurchase returns.

CSales.

DSales returns.

Show Suggested Answer

Suggested Answer: A

Choice 'a' is correct. In microcomputer audit applications, efficient and effective system usage requires:

(1) identification of the appropriate audit tasks and

(2) appropriate software to perform the selected audit tasks.

Choice 'b' is incorrect. Although microcomputer access to client data is desirable, it is not required.

Choice 'c' is incorrect. Although microcomputer access to client data is desirable, it is not required. Also, microcomputer audit applications need not be applicable to several clients to be efficient and effective.

Choice 'd' is incorrect. Microcomputer audit applications need not be applicable to several clients to be efficient and effective.

by Pearly at Apr 23, 2024, 09:23 AM

Limited Time Offer

25%

Off

Get Premium CPA-Auditing Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Rolland

2 months ago

Option D, sales returns, is the correct answer. The question is pretty straightforward, and the wording points us in that direction. Gotta love those inventory audits, am I right?

upvoted 0 times

Bettye

14 days ago

It's important for auditors to pay close attention to these details during inventory audits.

upvoted 0 times

...

Bettye

21 days ago

Definitely, sales returns can cause discrepancies in inventory counts.

upvoted 0 times

...

Bettye

2 months ago

D) Sales returns.

upvoted 0 times

...

Leonardo

2 months ago

Haha, I bet the client's accountant was like, 'Wait, where did all these extra items come from?' Option D is the clear winner here.

upvoted 0 times

Brianne

27 days ago

It's important for the client to accurately record all transactions to avoid these kinds of issues.

upvoted 0 times

...

Craig

30 days ago

Yeah, that would explain the discrepancy between the test counts and the perpetual records.

upvoted 0 times

...

Ashanti

1 months ago

I agree, option D makes the most sense. The client probably forgot to record the sales returns.

upvoted 0 times

...

Freeman

3 months ago

I'm going with option D. Sales returns. It's the only one that makes sense in the context of the question. The other options just don't seem relevant to the situation at hand.

upvoted 0 times

Herminia

29 days ago

I'm sticking with sales returns. It just seems like the most logical explanation for the discrepancy.

upvoted 0 times

...

Cathern

30 days ago

I see your point, but I still think it's purchase returns. It seems more likely in this scenario.

upvoted 0 times

...

Ryan

1 months ago

I disagree, I believe it's sales returns. That would explain the higher test counts.

upvoted 0 times

...

Remona

1 months ago

I'm not sure about purchase returns. I think it might be sales returns because that would also result in higher test counts than recorded quantities.

upvoted 0 times

...

Ressie

1 months ago

I agree with you, purchase returns could definitely be a possibility. It would explain the discrepancies in the test counts.

upvoted 0 times

...

Jerlene

1 months ago

I think it could be purchase returns. Maybe the client forgot to update the records when items were returned.

upvoted 0 times

...

Dick

2 months ago

I think it could be purchase returns. Those could have been missed in the perpetual records.

upvoted 0 times

...

Flo

3 months ago

Hmm, the client's failure to record sales returns seems like the most logical explanation here. That would definitely result in the test counts being higher than the perpetual records.

upvoted 0 times