Many entities have inventory on their books. The types of inventory can range from simple resale of goods purchased to more complex inventories that use process costing. This module will discuss accounting for and auditing less complex inventories and provide an overview of issues associated with auditing more complex inventories. Inventory observations were covered in an earlier module. (Please Note: This module is part of Surgent's Audit Skills Training: Level 3.)
Learning Objectives
- Recall the elements of inventory costing
- Apply inventory valuation methodologies to various types of inventory
- Determine reserve methodologies for inventory obsolescence
- Recall issues related to consignment inventory
- Assess risk and perform audit procedures on less complex inventories
Major Topics
- Elements of inventory cost and full-absorption costing
- Valuation methodologies, including LIFO, FIFO, weighted average, and specific identification
- Obsolescence reserves
- Retail inventory valuation basics
- Physical inventory observation approach refresher
- Accounting issues related to consigned inventory
- Risk associated with and steps performed in auditing of inventories.
