Which One of the Following Procedures Would Not Be Appropriate

question 107

Multiple Choice

Which one of the following procedures would not be appropriate for an auditor in discharging his responsibilities concerning the client's physical inventories?

• A)Confirmation of goods in the hands of public warehouses
• B)Supervising the taking of the annual physical inventory
• C)Carrying out physical inventory procedures at an interim date
• D)Obtaining written representation from the client as to the existence, quality, and dollar amount of the inventory

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Definitions:

Variable Costs

Expenses that vary directly with the level of production or sales volume, such as materials and labor.

Pretax Income

The income that a company earns before any taxes are deducted, representing the profitability of the company before government intervention.

Break-even Point

The level of production or sales at which total costs equal total revenues, resulting in no profit or loss.

Fixed Costs

Costs that are constant regardless of the volume of goods or services produced by a company, including lease payments and maintenance expenditures.