Reference no: EM132765678

Problem a: Determine the most suitable type of audit evidence collected by the auditor in each of the following circumstances:

1. Trace selected quantities from the inventory list to the physical inventory to make sure that they exist, and the quantities are the same.

2. Calculate the ratio of cost of goods sold to sales as a test of overall reasonableness of gross margin relative to the preceding year.

3. Send letters directly to third parties who hold the client's inventory and request that they respond directly to the auditors.

4. Ask the account payable clerk about procedures for verifying prices, quantities and extensions on vendor's invoices.

5. Foot the sales journal for a month period and compare all totals with the general ledger.