An Auditor Generally Tests the Segregation of Duties Related to Inventory

question 150

Multiple Choice

An auditor generally tests the segregation of duties related to inventory by:

• A) Personal inquiry and observation.
• B) Test counts and cutoff procedures.
• C) Analytical procedures and invoice recomputation.
• D) Document inspection and reconciliation.

---

Definitions:

Rent-seeking

The practice of gaining wealth without creating new wealth, typically through manipulating the social or political environment in which economic activities occur.

Short-sightedness Effect

The tendency of decision makers to prioritize immediate benefits at the expense of long-term gains.

Externalities

Costs or benefits that affect a party who did not choose to incur those costs or benefits, often leading to market failure if unaddressed by policy.

Rent-seeking Activities

Efforts to increase one’s share of existing wealth without creating new wealth, often through manipulation of the economic environment.