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:

Defined Contribution Pension Plan

A retirement plan where the amount contributed by employers or employees is specified, but the future benefit amount is not guaranteed, depending on investment performance.

Funding Obligation

Refers to the requirement for an entity to provide financial resources for a project, debt, or other commitment as agreed upon.

Underfunded Plans

Retirement or pension plans that lack enough assets to cover all present and future obligations.

Life Insurance

Life insurance is a contract between an insurer and a policyholder in which the insurer guarantees payment of a death benefit to named beneficiaries upon the death of the insured.