What Is the Primary Reason for Management's Ability to Easily

question 69

Multiple Choice

What is the primary reason for management's ability to easily overvalue inventory without rapid detection by auditors?

• A) The limited volume of transactions in the inventory accounts.
• B) The auditor's assessment of inventory as a low-risk area.
• C) Complexity in the valuation of inventory.
• D) Consideration by the auditor of non-financial indicators of inventory fraud.

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Definitions:

Basic Conclusion

A fundamental finding or decision reached after an analysis or investigation.

Constant-Cost Industry

An industry where input prices and production costs remain stable as output increases.

Horizontal Line

A straight line that runs left to right across the plane and has a slope of zero, indicating no change.