A Client Maintains Perpetual Inventory Records in Both Quantities and Dollars

question 494

Multiple Choice

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

• A) Increase the extent of tests of controls of the inventory cycle.
• B) Request the client to schedule the physical inventory count at the end of the year.
• C) Insist that the client perform physical counts of inventory items several times during the year.
• D) Apply gross profit tests to ascertain the reasonableness of the physical counts.