Which of the Following Is not a Reason for the Special

question 38

Multiple Choice

Which of the following is not a reason for the special significance attached by the auditors to the verification of inventories?

• A)The determination of inventory valuation directly affects net income.
• B)The existence of inventories is inherently difficult to substantiate.
• C)Special valuation problems often exist for inventories.
• D)Inventories are often the largest current asset of an enterprise.

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Definitions:

Days' Sales in Inventory

A financial metric that indicates the average time in days that a company takes to turn its inventory into sales.

Dividend Yield

A financial metric that measures the annual dividends issued by a company compared to the price of its shares.

Total Asset Turnover

A financial ratio that measures how efficiently a company uses its assets to generate sales revenue.

Inventory Turnover

A figure representing the number of times a business's stock is sold and restocked during a certain period.