Which of the Following Is an Accurate Statement Regarding the Audit

question 62

Multiple Choice

Which of the following is an accurate statement regarding the audit of pricing and compilation of inventory?

• A) Inventory compilation tests include all of the tests of the client's unit prices to determine whether they are correct.
• B) The review for obsolete inventory should be performed by the accounting department.
• C) The most important internal control for accurate unit costs is external verification by an outside consultant.
• D) Inventory compilation internal controls are needed to ensure that the physical counts are correctly summarized and priced.

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Definitions:

Cost of Purchases

The total expense incurred in acquiring goods and services, including price, shipping, and handling, among other costs.

Annual Sales

The total revenue a company generates from its operations over a one-year period.

Supply Chains

Networks involving organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer.

Supply Disruptions

Interruptions in the flow of goods or materials from suppliers that can lead to shortages and affect production or sales.