The Extent of the Auditor's Inventory Test Count Would Least

question 37

Multiple Choice

The extent of the auditor's inventory test count would least depend on which of the following?

• A) The nature and composition of the inventory.
• B) The care exercised by client employees in taking the inventory.
• C) The effectiveness of controls pertaining to maintenance of perpetual records.
• D) The effectiveness of controls pertaining to the safeguarding of the inventory.
• E) The existence of inventory at multiple locations.

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Definitions:

Indirect Method

A cash flow statement preparation approach that adjusts net income for changes in non-cash accounts to calculate operating cash flow.

Operating Activities

Actions and transactions related to the core business operations, such as sales and the production of goods or services.

Net Income

The total earnings of a company after subtracting all expenses, taxes, and costs from the total revenue.

Income Taxes Payable

Income Taxes Payable are the taxes that a company owes to the government, which have been incurred but not yet paid, appearing as a current liability on the balance sheet.