What Is the First Step That the Auditor Takes When

question 37

Multiple Choice

What is the first step that the auditor takes when auditing the valuation of inventory?

• A)Conduct analytical review,comparing gross margin for the current year to the prior year.
• B)Do an industry analysis to determine whether there is a potential for technology-induced obsolescence.
• C)Ask the client about the level of obsolete inventory that was on hand and counted during the inventory count.
• D)Clearly establish the valuation method used and how the calculations are being performed.

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Definitions:

Bufferin

A brand of aspirin that contains a buffering agent to prevent stomach irritation.

Acetyl Salicylic Acid

A chemical compound better known as aspirin, used as an anti-inflammatory, analgesic, and antipyretic.

Buffer

Substance or group of substances that tend to resist pH changes of a solution, thus stabilizing its relative acidity and basicity.

Inorganic

Refers to compounds that generally do not contain carbon-hydrogen bonds, often associated with minerals and non-living matter.