>> Financial Accounting
You are engaged in your CPA firm's 1st audit of Zorostria, a retailer of artwork, photographs purchased and primarily paintings from artists in Southeast Asia (mainly Vietnam, Laos and Cambodia.) Zorostria has stores in seven cities all over the Mexico, United States, and Canada.
Show difficulties you should anticipate in planning the observation of physical inventory on this engagement because of:
a. The special locations of stores.
b. The nature of artwork.
c. Consider that Zorostria's records shows that it shipped goods on December 31 for a very major sale to a customer in Edmonton, Canada, Alberta.
(1) Since it was shipped as of 31st December, does this represent a sale for the year ended on that date?
(2) What additional audit steps would be taken to evaluate that the sale is valid?