When Perpetual Inventory Records Are Maintained in Quantities and in Dollars

question 71

Multiple Choice

When perpetual inventory records are maintained in quantities and in dollars and internal control over inventory is weak, the auditor would probably

• A) Want the entity to schedule the physical inventory count at the end of the year.
• B) Insist that the entity perform physical counts of inventory items several times during the year.
• C) Increase the extent of tests for unrecorded liabilities at the end of the year.
• D) Have to disclaim an opinion on the income statement for that year.

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Definitions:

Excise Tax

A tax imposed on specific goods, services, or transactions, often included in the price of products like tobacco, alcohol, and fuel, to generate revenue or discourage consumption.

Price Elasticity

A measure of the responsiveness of the quantity demanded or supplied of a good or service to a change in its price.

Price Elasticity

An indicator of the sensitivity of demand for a product to variations in its price.

Relatively Inelastic

Describes a demand characteristic where a change in price leads to a smaller proportionate change in quantity demanded.