Question

Once the inventory count observation is complete, which of the following steps is most likely to be performed before leaving the entity's premises?

1) Reconciling the physical count with the recorded count
2) Preparing a report of the inventory count
3) Updating the inventory records
4) Obtaining approval from management

Answer 1

The correct answer is 3) The most likely step to be performed before leaving the entity's premises after completing the inventory count observation is updating the inventory records.

Step-by-step explanation:

The step most likely to be performed before leaving the entity's premises after completing the inventory count observation is updating the inventory records.

By updating the inventory records, any discrepancies between the physical count and the recorded count can be adjusted, ensuring the accuracy of the inventory information.

Once the inventory records are updated, other steps such as reconciling the physical count with the recorded count, preparing a report of the inventory count, and obtaining approval from management can be completed.

Answer 2

The most likely step to be performed before leaving the entity's premises after inventory count observation is reconciling the physical count with the recorded count to ensure accuracy and integrity of inventory records.

Step-by-step explanation:

Observations, Outcomes, and Next Steps

Once the inventory count observation is complete, a crucial step before leaving the entity's premises is likely to be reconciling the physical count with the recorded count. This process ensures that the quantities observed during the count match the numbers that are officially recorded in the company's inventory records. If discrepancies are found, it may lead to further investigation or adjustments to the inventory records.

While preparing a report of the inventory count and obtaining approval from management are important steps, they typically occur after the reconciliation process. Updating the inventory records may eventually follow, but not before ensuring that the physical counts match the records.

It is important to note that the reconciliation process aids in providing accurate data for financial reporting and decision-making. Large organizations or audit firms may use specific methodologies for this reconciliation to ensure the integrity of financial information.