If Most Companies in the Industry Use FIFO Inventory Valuation

question 24

Multiple Choice

If most companies in the industry use FIFO inventory valuation and straight-line depreciation, and the audit client uses weighted average and double-declining balance, comparisons of client and industry data:

• A) will be a meaningful highlight of the result of these differences in accounting methods.
• B) may not be meaningful.
• C) will enable the auditor to spot irregularities but not errors.
• D) will enable the auditor to spot errors but not irregularities.

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Definitions:

Prefer

To like, choose, or desire one thing over another, based on individual taste or judgment.

Existing Groups

Pre-established groups that have formed naturally or have been organized for a specific purpose prior to a study or intervention.

Cross-Generational Studies

Research investigations that compare different age groups over time to understand changes and continuities in behaviors, attitudes, or conditions across generations.

Coercive Power

A form of power that is based on the ability to deliver punishments or remove rewards to influence others.