In Obtaining an Understanding of a Manufacturing Entity's Internal Control

question 48

Multiple Choice

In obtaining an understanding of a manufacturing entity's internal control concerning inventory balances, an auditor most likely would

• A) Review the entity's description of inventory policies and procedures.
• B) Perform test counts of inventory during the entity's physical count.
• C) Analyze inventory turnover statistics to identify slow-moving and obsolete items.
• D) Analyze monthly production reports to identify variances and unusual transactions.

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Definitions:

Air Disc Brake Rotors

Components of a disc brake system on vehicles, where compressed air is used to generate braking force on the rotors to slow down or stop the vehicle.

Spring Brake Chamber

A component in vehicle braking systems that uses a spring mechanism to apply force to the brakes, particularly for parking and emergency brakes.

C-Inspections

A detailed level of inspection, often referring to a thorough examination of aircraft components but may apply to other fields for comprehensive checks.

Service Air Application

The use of compressed air in various maintenance and repair operations, often related to vehicle systems.