Which of the Following Is an Accurate Statement Regarding Inventory

question 6

Multiple Choice

Which of the following is an accurate statement regarding inventory and risk?

• A) Inventory with a high business risk includes products with potential obsolescence.
• B) Auditors often have a greater concern for misstatements when inventory is stored in one warehouse.
• C) Inherent risk is generally set at low for manufacturing companies.
• D) Performance materiality for inventory is determined before assessing client business risk.

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Definitions:

Visual Perception

The ability to interpret the surrounding environment by processing information contained in visible light.

Absolute Threshold

The smallest quantity of physical energy that can be reliably detected by an observer.

Groupthink

A psychological phenomenon that occurs within a group of people, in which the desire for harmony or conformity in the group results in an irrational or dysfunctional decision-making outcome.

Suppress Dissension

The act of preventing or reducing disagreement or opposition, typically within a group or organization.