The Audit Strategy That Would Be Most Appropriate When an Auditor

question 12

Multiple Choice

The audit strategy that would be most appropriate when an auditor has assessed a predominantly substantive approach is necessary to determine inventory quantity is:

• A) inventory quantities determined by physical count at or within a few days of balance date.
• B) inventory quantities determined by physical count near balance date, adjusted by reference to perpetual records.
• C) inventory quantities determined by reference to perpetual records, without a physical count at or near balance date.
• D) none of the above.

---

Definitions:

Common Stock

A form of corporate equity ownership, representing a claim on a portion of the corporation's profits and assets.

Excess Of Par

The amount by which the sale price of a share of stock exceeds its par value, often recorded as additional paid-in capital on the balance sheet.

Cash Dividend

A cash dividend is a payment made by a company out of its earnings to shareholders, usually in the form of cash.

Financial Statements

Reports that show the financial performance and position of a company, including the balance sheet, income statement, and cash flow statement.