1. a measure that could have prevented the theft 2. a measure that could have detected the theft 3. a step to take once fraud is suspected.
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- The company just took a physical count of inventory and found $75 worth of inventory was unaccounted for. It was either stolen or damaged. Which journal would the company use to record the correction of the error in inventory? A. sales journal B. purchases journal C. cash receipts journal D. cash disbursements journal E. general journalA retail business like Best Buy experiences some loss of inventory due to shoplifting, employee theft, or errors. The difference between the physical inventory count at the end of the accounting period and the balance of Merchandise Inventory in the accounting records is called ___________. Group of answer choices inventory reduction. inventory theft. inventory loss. inventory shrinkage or inventory shortage.Which of the following procedures would best prevent or detect the theft of valuable items from an inventory that consists of hundreds of different items selling for $1 to $10 and a few items selling for hundreds of dollars?a. Maintain a perpetual inventory of only the more valuable items with frequent periodic verification of the accuracy of the perpetual inventory record.b. Have an independent accounting firm prepare an internal control report on the effectiveness of the controls over inventory.c. Have separate warehouse space for the more valuable items with frequent periodic physical counts and comparison to perpetual inventory records.d. Require a manager’s signature for the removal of any inventory item with a value of morethan $50.
- Which of the following may be an indication of inventory theft? COGS is significantly different from the forecast amount a physical count of inventory reveals missing items inventory turnover shows an abnormal increase gross profit falls significantly e. all of the aboveWhich of the following is an example of fraudulent financial reporting? a. The treasurer diverts customer payments to his personal due, concealing his actions by debiting an expense account, thus overstating expenses. O b. An employee steals inventory and the "shrinkage" is recorded in cost of goods sold. O c. Company management changes inventory count tags and overstates ending inventory, while understating cost of goods sold. O d. An employee steals small tools from the company and neglects to return them; the cost is reported as a miscellaneous operating expense.Which of the following is an internal control weakness for a company whose inventory of supplies consists of a large number of individual items?a. Supplies of relatively little value are expensed when purchased.b. The cycle basis is used for physical counts.c. The warehouse manager is responsible for maintenance of perpetual inventory records.d. Perpetual inventory records are maintained only for items of significant value
- A retailer’s physical count of inventory was higher than that shown by the perpetual records.Which of the following could explain the difference?a. Inventory items had been counted, but the tags placed on the items had not been taken off and added to the inventory accumulation sheets.b. Credit memos for several items returned by customers had not been recorded.c. No journal entry had been made on the retailer’s books for several items returned to its suppliers.d. An item purchased FOB shipping point had not arrived at the date of the inventory count and had not been reflected in the perpetual records.As the lead accountant for a small company, you notice that inventory purchases from a certain vendor have increased dramatically over the past few months, whereas purchases from all other vendors have decreased. You suspect that something may not be right and that there may be a fraudulent relationship between someone in your company and the vendor that is getting increased business. question: Which theft act investigative method would you use to investigate your suspicions? state evidences that you to support suspicions.Unconcealed larceny includes: stealing with no attempt to cover up the theft falsified receiving reports that cover up a theft by recording a shortage or “defective goods” altering inventory records to match the balance in the inventory account all of the above
- During the taking of physical inventory, the controller intentionallywithheld several inventory tags from the employees responsible for the physical count.After the auditor left the client’s premises at the completion of the inventory observation,the controller recorded nonexistent inventory on the tags and thereby significantly overstated earnings. How could the auditor have uncovered the misstatement, assuming thatthere are no perpetual records?During the taking of physical inventory, the controller intentionally withheld several inventory tags from the employees responsible for the physical count. After the auditor left the client’s premises at the completion of the inventory observation, the controller recorded nonexistent inventory on the tags and thereby significantly over-stated earnings. How could the auditor have uncovered the misstatement, assuming that there are no perpetual records?The following misstatements are included in the inventory and related records of Westbox Manufacturing Company: 1.When raw material acquisitions were recorded, the improper unit price was included in the perpetual inventory master file. Therefore, the inventory valuation was misstated because the physical inventory was priced by referring to the perpetual records. 2.In taking the physical inventory, the last shipments for the day were excluded from inventory and were not included as a sale until the subsequent year. 3.The clerk in charge of the perpetual inventory master file altered the quantity on an inventory tag to cover up the shortage of inventory caused by its theft during the year. 4.After the auditor left the premises, several inventory tags were lost and were not included in the final inventory summary. 5.During the physical count, several obsolete inventory items were included. 6.Because of a significant increase in volume during the current year and excellent control over…