The Auditor Is Determining Which Specific Inventory Items Should Be

question 61

Multiple Choice

The auditor is determining which specific inventory items should be selected for pricing tests.The auditor has selected a representative sample,and those items that have a large dollar amount.In addition,the auditor should select those items that

• A)are prone to breakage or theft.
• B)have wide fluctuations in price.
• C)are stored in multiple locations.
• D)are likely to have been miscounted during the inventory count.

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Definitions:

Equilibrium

Equilibrium refers to a state in which market supply and demand balance each other, and as a result, prices become stable.

Call Option

A financial contract that gives the holder the right, but not the obligation, to buy a stock, bond, commodity, or other asset at a specific price within a specified time frame.

Strike Price

The specified price at which the holder of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.

Stock Beta

A measure of a stock's volatility in relation to the overall market; reflects the risk associated with a specific stock.