If an Auditor Were Concerned with Obtaining Evidence About the Appropriateness

question 54

Multiple Choice

If an auditor were concerned with obtaining evidence about the appropriateness of the value of inventory, which of the following tests would be most appropriate?

• A)Compilation tests
• B)Price tests
• C)Confirmation of inventory held by outside parties
• D)Physical examination of the inventory

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Definitions:

Profit Centers

Divisions or branches of a business that are treated as separate units for the purpose of calculating profitability, allowing for more focused financial analysis.

Decision Making

The cognitive process leading to the selection of a course of action among several alternatives.

Division Costs

Division costs pertain to the expenses associated with operating a specific department or division within a larger organization.

Division Revenue

The total amount of income generated from sales or services provided by a specific division within a company.