The Auditor's Tests of the Adequacy of the Physical Controls

question 3

Multiple Choice

The auditor's tests of the adequacy of the physical controls over raw materials,work-in-process,and finished goods are usually limited to

• A)observation and inquiry.
• B)inspection and observation.
• C)inspection and confirmation.
• D)inspection and inquiry.

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Definitions:

Cash

Money in the form of currency that can be used immediately for transactions.

General Ledger

The master set of accounts that summarizes all transactions occurring within an entity, serving as the main accounting record.

Journal Entry

A record in accounting that notes the details of a financial transaction as it happens.

Stockholders' Equity

Represents the residual interest in the assets of a corporation after deducting liabilities. It typically includes common stock, preferred stock, retained earnings, and treasury stock.