The Auditor Should Review and Evaluate the Client's Inventory-Taking Plans

question 25

True/False

The auditor should review and evaluate the client's inventory-taking plans during the observation of the inventory.

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Definitions:

Year-End Purchase

Acquisitions or purchases made by a company close to the end of its fiscal year, often impacting the annual financial statements.

LIFO Cost of Goods Sold

An inventory costing method where the last items placed in inventory are considered the first ones sold, affecting the cost of goods sold during a period.

FIFO Inventory Costing

A method of inventory valuation where the cost of goods sold is based on the oldest inventory prices, which stands for "First In, First Out."

Ending Inventory

The total value of goods available for sale at the end of an accounting period, calculated as the beginning inventory plus purchases minus the cost of goods sold.