A Risk to the Auditor Due to the Complexity of Physical

question 28

Multiple Choice

A risk to the auditor due to the complexity of physical inventory includes the possibility of which of the following?

• A)Overstatement of individual items across multiple locations for cutoff testing.
• B)Utility of the items exceeding their cost for existence testing.
• C)Movement of goods during existence testing.
• D)Stocking of only one type of inventory in the warehouse for presentation and disclosure testing.

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Definitions:

Placebo

A substance used in experiments that has no therapeutic effect.

Therapeutic Effect

The beneficial outcome of a treatment or intervention on the health or well-being of an individual or population.

Prove Claims

The process of demonstrating the truth or validity of statements or assertions through evidence or argument.

Possible Doubt

A situation or condition where uncertainty or skepticism exists regarding a fact, claim, or outcome.