Which Analytical Procedure Would Be Most Helpful in Alerting the Auditor

question 28

Multiple Choice

Which analytical procedure would be most helpful in alerting the auditor to the possibility of obsolete inventory? Compare

• A) current year manufacturing costs with previous years' costs.
• B) gross margin percentage with previous years' percentages.
• C) inventory turnover ratio with previous years' ratios.
• D) unit costs of inventory with previous years' costs.

---

Definitions:

Inventory Value

The total cost or market value of all the goods held by a company, intended for sale in the ordinary course of business.

Cost

The monetary value required to produce, acquire, or maintain a product or service.

Retail Values

The price at which goods and services are sold to consumers in a retail setting, often higher than wholesale prices.

Inventory Value

The sum of the market value or total cost of all products and goods that a company has in stock for the purpose of selling.