In performing tests of balances on inventory balances, the auditor should recognize that the following potential errors may occur or exist:

1. All inventory items are not counted or tagged.

2. Extension errors are made on the client's inventory summaries.

3. Purchases received near the balance sheet date may be included in the physical count but may not be booked.

4. Obsolete and damaged goods may not be recognized.

5. Inventory stored in a public warehouse may not exist.

6. Client personnel may incorrectly count the inventory.

7. The lower of cost or market method may be incorrectly applied.

8. Empty containers or hollow squares may be included in the inventory.

9. Goods held on consignment may be included as inventory.

10. Losses on purchases commitments may not be recognized.

Required:

a. Identify the audit procedure that should enable the auditor to detect each error.

b. Indicate the audit objective to which the audit procedure relates.

c. Identify the type of evidential matter obtained by the audit procedure.