Goods sold on the basis of 'sales or return ' should:
Correct answer: A. Be included in the stock
- A. Be included in the stock
- B. Not be included in the stock
- C. Not be checked by auditor
- D. None of the aboveGet Study Guides
Explanation
Under a sale-or-return arrangement, ownership remains with the seller until the buyer accepts the goods or the return period expires, so the goods remain part of the seller’s stock. They should therefore be included in inventory.
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About Auditing
Auditing examines accounting records and financial statements to determine whether they present a reliable and fairly stated position. The subject covers audit objectives, internal controls, audit evidence, materiality, vouching, verification, working papers, auditor independence, audit reports, and the distinction between an audit and accounting or investigation.
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