If Most Companies in the Industry Use FIFO Inventory Valuation

question 40

Multiple Choice

If most companies in the industry use FIFO inventory valuation and straight-line depreciation,and the audit client uses weighted-average cost inventory valuation and double-declining balance,comparisons of client and industry data

• A)will be a meaningful highlight of the result of these differences in accounting methods.
• B)will enable the auditor to spot errors but not irregularities.
• C)will enable the auditor to spot irregularities but not errors.
• D)may not be meaningful,affecting the comparability of data.

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Definitions:

Statistical Control

A set of statistical techniques used to adjust for or take into consideration the effects of other variables when analyzing data sets.

Final Output

The ultimate product or result that is produced after completing a process or series of actions.

R Charts

Control charts used in statistical process control to monitor the range of variation within a sample, assessing the process stability over time.

Spread Measurement

A statistical tool used to describe the variability or dispersion of data points within a dataset.