Which One of the Following Is NOT an Element of the Audit

question 13

Multiple Choice

Which one of the following is NOT an element of the audit of the inventory and warehousing cycle?

• A) Review timekeeping procedures for manufacturing employees.
• B) Physically observe inventory.
• C) Check how goods are shipped and revenue and costs are recorded.
• D) Price and compile inventory.

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Definitions:

Diversifiable Risk

Relates to the risk that can be reduced or eliminated from a portfolio by holding a variety of investments.

Non-Diversifiable Risk

A type of investment risk that cannot be eliminated through diversification, arising from factors that affect all companies.

Efficient Markets Hypothesis (EMH)

The hypothesis is that actual capital markets, such as the TSX, are efficient.

CAPM

Capital Asset Pricing Model, a theory that describes the relationship between systematic risk and expected return for assets, particularly stocks.