A Client Maintains Perpetual Inventory Records in Quantities and in Dollars

question 59

Multiple Choice

A client maintains perpetual inventory records in quantities and in dollars. If the assessed control risk is high, an auditor would probably

• A)apply gross profit tests to ascertain the reasonableness of the physical counts.
• B)increase the extent of tests of controls relevant to the inventory cycle.
• C)request the client to schedule the physical inventory count at the end of the year.
• D)insist that the client perform physical counts of inventory items several times during the year.

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Definitions:

Clarifying Behavior

Actions or statements undertaken to make ideas, expectations, or processes clearer and more understandable.

Role Ambiguity

A situation where an individual lacks clear information about their job responsibilities, expectations, and the scope of their role.

Role Conflict

Occurs when there are incompatible demands placed on an individual by two or more roles they are expected to perform, leading to stress and difficulty in fulfilling duties.

Involvement

This refers to the degree of engagement and participation an individual or group has within a task, project, or decision-making process.