In Connection with the Client's Physical Count of Inventory, Adequate

question 81

Multiple Choice

In connection with the client's physical count of inventory, adequate controls include:

• A) proper instructions for the physical count and supervision by responsible personnel
• B) adequate control over count sheets or tags.
• C) independent internal verification including reconciliation of physical counts with perpetual inventory master files.
• D) all of the above

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Definitions:

Variable Cost

Expenses that vary in direct proportion to changes in the level of production or sales volume.

Fixed Cost

Costs that remain constant in total amount with changes in the volume of activity, such as rent and salaries.

Mixed Cost

Expenses that have both fixed and variable components, changing with the level of activity but also containing a static element.

Margin Of Safety

The difference between actual or projected sales and the break-even point, indicating the amount of sales that can decline before a business incurs a loss.