An Auditor for a Major Retail Company Suspects That Inventory

question 226

Multiple Choice

An auditor for a major retail company suspects that inventory fraud is occurring at three stores which have high costs of goods sold. Which of the following audit activities would provide the most persuasive evidence that fraud is occurring?

• A) Use an integrated test facility (ITF) to compare individual sales transactions with test transactions submitted through the ITF and investigate all differences.
• B) Interview the three individual store managers to determine if their explanations about the observed differences are the same, and then compare their explanations to that of the section manager.
• C) Schedule a surprise inventory audit to include a physical inventory and investigate areas of inventory shrinkage.
• D) Select a sample of individual store prices and compare them with the sales entered on the cash register for the same items.

Understand the concept of industry self-regulation and its manifestations in motion picture ratings, television content ratings, and music labeling.

Appreciate the debate around media regulation, press freedoms, and the diversity of viewpoints on government intervention in media.

Comprehend the rationale behind copyright laws and the interests of the media industry in protecting intellectual property.

Consider the varying motivations and perspectives on media regulation across political landscapes.

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Definitions:

Segmented Market

A market divided into groups according to customers’ different needs and problems.

Mass Market

Refers to the large, general group of consumers that products are aimed at, not tailored to specific niches.

Nondiscriminating Consumers

Customers who do not show preference or bias towards products based on brand, appearance, or other superficial factors, focusing instead on functionality or value.

Similar Needs

The comparable or identical requirements or desires of different customers or client segments.