If the Auditor Concludes That the Physical Controls Over Inventory

question 39

Multiple Choice

If the auditor concludes that the physical controls over inventory are so inadequate that inventory will be difficult to count,the auditor should

• A)inquire of management the additional controls that can be put in place to enable a better count to be carried out.
• B)conduct additional control tests over the pricing and compilation of inventory to obtain a higher degree of accuracy.
• C)rely on the perpetual inventory master files rather than the physical count.
• D)expand the observation of physical inventory tests to ensure that an adequate count is carried out.

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Definitions:

Memory Capacity

The amount of data or information that can be stored in a device's memory system.

KB

Kilobyte, a unit of digital information storage equal to 1,024 bytes.

MB

Megabyte, a unit of digital information storage or transmission which comprises approximately 1 million bytes.

GB

Gigabyte, a unit of digital information storage equal to 1,024 megabytes or roughly 1 billion bytes.