You Are Auditing a Store That Sells Merchandise

question 34

Multiple Choice

You are auditing a store that sells merchandise. Some of the store merchandise is held on consignment. Which account balance assertion for inventory should you be most concerned about verifying?

• A)Existence or occurrence.
• B)Completeness.
• C)Rights and obligations.
• D)Valuation or allocation.

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Definitions:

Time Weighted

A method of calculating investment returns that eliminates the effects of cash inflows and outflows on the performance.

Rate of Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment's initial cost.

Dollar-Weighted Return

A method of calculating an investment's return that takes into account the timing and amount of capital inflows and outflows.

Internal Rate

The internal rate of return (IRR) is a financial metric used to evaluate the profitability of potential investments, representing the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.