To Detect an Overstatement or Understatement of Inventory and Cost

question 67

Multiple Choice

To detect an overstatement or understatement of inventory and cost of goods sold,the auditor may perform an analytical procedure such as comparing

• A)gross margin percentage with previous years.
• B)inventory turnover with previous years.
• C)current year manufacturing costs with previous years.
• D)extended inventory value with previous years.

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Definitions:

Minimizing Errors

The process of making all necessary efforts to reduce mistakes or inaccuracies in a given task or document.

Gathering Information

The process of collecting data, facts, or details from different sources to increase knowledge or make informed decisions.

Business Report

A document that presents information in a structured format for business purposes, including analysis and recommendations.

Collaborative Project

An endeavor undertaken by two or more individuals or groups working together towards a common objective or goal.