The Principle of Lower of Cost or Market and the Potential

question 78

Multiple Choice

The principle of lower of cost or market and the potential obsolescence of inventory are a concern for the audit team because of which of the following?

• A) They are uncommon and may not exist.
• B) They are a burden to the auditor in the undue amount of work caused.
• C) They are likely to occur in the last month of the year and cause cutoff problems.
• D) They are an inherent component of complexity related to valuation.

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Definitions:

Consumerism

The movement advocating for the rights and protection of consumers, including the demand for products that are safe, reliable, and reasonably priced.

Very Restrictive Return Policies

Return policies that greatly limit the conditions under which products can be returned or exchanged by customers.

Customer Relationship Management

A strategy and software for managing a company’s interactions with current and potential customers, aiming to improve business relationships.

Database Warehouse

A central repository for all or significant parts of the data that an enterprise's various business systems collect, optimized for query and analysis rather than transaction processing.