Which of the Following Should Be Assessed When Analyzing the Quality

question 71

Multiple Choice

Which of the following should be assessed when analyzing the quality of the cost of goods sold amount:

• A) The cost flow assumption for inventory
• B) The method used to count physical inventory
• C) The amount of discretionary expenses included in the cost of goods sold amount.
• D) The method used to depreciate inventory.

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Definitions:

Public Company Accounting Oversight Board

A nonprofit corporation established by Congress to oversee the audits of public companies in order to protect investors and the public interest by promoting informative, accurate, and independent audit reports.

SEC Oversight

Regulatory oversight exercised by the Securities and Exchange Commission, aiming to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.

Short-Swing Profits

Profits made from the sale of company stock within any six-month period by a statutory insider.

Statutory Insider

An individual or entity that possesses confidential information about a company due to their position or relationship to it, as defined by law.