Which of the Following Audit Procedures Would Not Likely Detect

question 105

Multiple Choice

Which of the following audit procedures would not likely detect a client's decision to pledge or factor accounts receivable?

• A) a review of the minutes of the board of directors' meetings
• B) discussions with the client
• C) confirmation of receivables
• D) examination of correspondence files

---

Definitions:

Inventory Turnover

Inventory turnover is a ratio that measures how many times a company's inventory is sold and replaced over a specific period, indicating efficiency in inventory management.

Average Daily Cost

The total cost associated with a process or product divided by the number of days in the period being considered.

Days' Sales

A financial metric, often calculated as days sales outstanding (DSO), that measures the average number of days it takes a company to collect payment after a sale has been made.

Retail Method

An inventory valuation method used by retailers that estimates inventory value by applying a cost to retail price ratio.