Why is it that POST YEAR-END sales invoices inspected to ensure that the goods sold are recorded are at correct NRV to assess its reasonableness than PRIOR YEAR END sales invoices?
Ask the Tutor ACCA AA
Procedures relating to inventory at final audit
5y ago#1Suppose the y/e is 31 December for a retail chain. A brand of jumpers costing $30 are selling for $50.In the January sales all clothes are promoted as 50% off.
What is the net realisable value of the jumpers in INVENTORY as at 31 December?
It's $25, which is less than cost and therefore the inventory valuation must be written down from cost $30 by making an allowance of $5 per item.
The sale of inventory after the reporting date is an example of an ADJUSTING event.
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