When There Are No Perpetual Inventory Files and Inventory Is

question 127

Multiple Choice

When there are no perpetual inventory files and inventory is material,

• A) an audit cannot be performed, so the auditor must issue a disclaimer.
• B) a physical inventory should be taken by the client near the end of the accounting period.
• C) the auditor will have to perform the inventory count and determine valuation.
• D) the auditor need not observe inventory counts but must do test counts.

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Definitions:

Categorical Syllogism

A form of deductive reasoning consisting of three propositions: a major premise, a minor premise, and a conclusion, each of which states something about categories of things.

Hypothetical

Based on or serving as a hypothesis, a supposed but unproven premise or supposition used as the basis for further reasoning.

Disjunctive

A logical term referring to a choice between alternatives, often expressed in the format "A or B".

Syllogism

A form of logical reasoning where a conclusion is drawn from two given or assumed propositions (premises), each sharing a common or middle term not present in the conclusion.