In Proposed PCAOB Rule 4012,"Inspection of Foreign Registered Public Accounting

question 24

Multiple Choice

In proposed PCAOB Rule 4012,"Inspection of Foreign Registered Public Accounting Firms" issued for comment in December 2007,which of the following is NOT one of the broad principles upon which the Board may place full reliance on the inspection program of qualified non-U.S.auditor oversight entities?

• A)transparency of the oversight system
• B)adequacy and integrity of the oversight system
• C)rigidity of professional standards mandated by the oversight system
• D)independence of the oversight system's source of funding

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Definitions:

Periodic Inventory System

An inventory accounting system where updates to inventory records are made on a periodic basis, not continuously.

Physical Inventory

A process of counting and verifying the actual inventory on hand at a business location, typically performed at the end of an accounting period.

Merchandise Purchases

Transactions involved in buying goods for resale in the normal course of business, typically constituting a significant expense for retail companies.

Physical Inventory

Physical Inventory involves a manual count of all physical goods a company has in stock at a specific point in time to ensure accuracy of inventory records.