The Auditor Need Not Be Concerned About Inventory Being Classified

question 69

True/False

The auditor need not be concerned about inventory being classified and disclosed, properly, into finished goods, work-in-process and raw materials (separately) in the financial statements; this is management's responsibility, only.

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Definitions:

Work Compromised

Occurs when the quality or integrity of work is diminished or placed at risk due to various factors, such as resource limitations or conflicts.

Negative Externalities

Costs suffered by a third party due to an economic transaction or activity for which they are not compensated.

Positive Externalities

Benefits that are experienced by third-parties or the society at large as a result of an economic transaction or activity, without those third parties directly paying for the benefits received.

Efficient Output Levels

Points of production where the economy can no longer increase the production of one good without decreasing the production of another good, achieving an optimal distribution of resources.