The Client Has a Perpetual Inventory System,and Takes an Inventory

question 10

Multiple Choice

The client has a perpetual inventory system,and takes an inventory count of 100 items every two weeks for comparison to the perpetual records.There are no plans to have a complete year-end physical count of inventory.How will the auditor conduct the audit of physical inventory?

• A)Select an attribute sample of items to count at the year end for comparison to the perpetual records.
• B)Select a dollar unit sample of items to count at the year end for comparison to the perpetual records.
• C)Use roll-forwards to carry forward the inventory records from the cyclical counts for an attribute sample of inventory items.
• D)Conduct test counts and compare the perpetual records with a cyclical count during the interim audit.

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Definitions:

Voluntary

Actions or practices that are undertaken by choice or without coercion, often indicating goodwill or compliance beyond what is required by law.

Ethics Report

A document that outlines the ethical standards, policies, and practices of an organization, often highlighting areas of compliance and areas for improvement.

Verification

The process of establishing the truth, accuracy, or validity of something.

Risks And Liabilities

Potential hazards or debts that could lead to negative consequences for individuals or organizations.