An Audit to Determine Whether an Entity Is Following Specific

question 60

Multiple Choice

An audit to determine whether an entity is following specific procedures or rules set down by some higher authority is classified as a(n)

• A) audit of financial statements.
• B) compliance audit.
• C) operational audit.
• D) production audit.

---

Definitions:

Warehouse Inventory

The list of goods and materials held in a warehouse that are available for sale or production needs.

Pipeline Inventory

Inventory that is in transit or in the process of being transported between the supplier and the buyer, often considered part of the overall inventory on order but not yet available for use or sale.

Safety Inventory

Additional stock kept to mitigate the risk of stockouts due to fluctuations in demand or supply lead times.

Cycle Inventory

Inventory that is held or processed in batches, cycling through the production and supply chain processes.