If Most Companies in the Industry Use FIFO Inventory Valuation

question 87

Multiple Choice

If most companies in the industry use FIFO inventory valuation and straight- line depreciation, and the audit client uses weighted average and double- declining balance, comparisons of client and industry data:

• A) will enable the auditor to spot irregularities but not errors.
• B) will be a meaningful highlight of the result of these differences in accounting methods.
• C) will enable the auditor to spot errors but not irregularities.
• D) may not be meaningful.

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