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Misstatement of inventories or cost of good sold can be detected by:

A) Cost of good sold divided by gross sales B) Total purchases divided by inventory C) Cost of good sold divided by inventories D) Total purchase divided by cost of good sold

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Question added by Mir Mujtaba Ali , Internal Audit Manager , Confidential
Date Posted: 2015/03/12
Wasi Rahman Sheikh
by Wasi Rahman Sheikh , WAREHOUSE SUPERVISOR , AL MUTLAQ FURNITURE MFG

Answer will be C) Cost of good sold divided by inventories

Ahmed kandil
by Ahmed kandil , Cost Controller , Battour Holding Cpompany

answer C  is the correct answer 

Mir Mujtaba Ali
by Mir Mujtaba Ali , Internal Audit Manager , Confidential

Thanks for your responses

The answer is

Cost of goods sold divided by gross sales

Almutaz Bakry Sidahmed
by Almutaz Bakry Sidahmed , Internal Audit Manager , Banan real estate

Answer (c). Inventory turnover is one of the analytical methods that we use to identify whether inventory is overstated and cost of good sold is understated if the ratio is low.

Sahar Alech
by Sahar Alech , Auditor / Financial Manager , Accounting Services Office

answe c is the answer.........

 

ahmed aldhurafi
by ahmed aldhurafi , مراجع داخلي ومراقب مالي , شركة تأمين

(correct answer is (c 

Misstatement of inventories or cost of good sold can  be detected by Cost of good sold divided by   inventories because this give us inventory turnover.

 If inventory turnover low, It mean there is a problem...... 

Ezzidin Ibrahim
by Ezzidin Ibrahim , Financial Controller , Karim Food Industries

A) Cost of good sold divided by gross sales. all other answers have no meaning to verify whether the COS or inventory is overstatement or not. COS/Sales must have almost all a fixed percentage, since the COS and the sales figures are variable in nature but the COS/Sales % must be fixed. therefore when the percentage have changed, this means that there is something wrong in the sales figures and/or COS figures and/or inventory figures.

MUHAMMED HARIS MI
by MUHAMMED HARIS MI , Senior Audit Staff , Saud Bahwan Group LLC.

option C is correct.............................

Khalil Jeries Al Wahhab  CPA
by Khalil Jeries Al Wahhab CPA , Group Manager Internal Audit , El Seif for Operations and Maintenance

There is always a known mark-up amount over inventory cost which would lead to sales figure. Therefore, if the sales amount is assumed correct then COGS must represent a WELL KNOWN percentage from Sales. If this percentage is NOT as expected then something wrong with COGS or INVENTORY amount. Answer A is the relevant correct one. Other answers are remote. Thanks.

fadil hoory
by fadil hoory , محاسب , شركة مقاولات بالسعودية

 Very good question The answer is no. (c)

Leonard Santiago
by Leonard Santiago , Analyst - Financial & Budget , Unified Real Estate Development Company

 

 

Answer: C) Cost of good sold divided by inventories 

This two accounts are vital in inventory turnover computation. Any abnormalities in the turnover indicates a miscalculation of the two accounts.

 

 

 

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