Which One of the Following Procedures Would Not Be Appropriate

question 60

Multiple Choice

Which one of the following procedures would not be appropriate for an auditor in discharging his or her responsibilities concerning the entity's physical inventories?

• A)Confirmation of goods in the hands of public warehouses.
• B)Supervising the annual physical inventory count.
• C)Carrying out physical inventory procedures at an interim date.
• D)Obtaining written representation from the entity as to the existence, quality, and dollar amount of the inventory.

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Definitions:

Internal Rate

Commonly known as the Internal Rate of Return (IRR), it represents the interest rate at which the net present value of all the cash flows (both positive and negative) from a project or investment equals zero.

Modified Internal Rate

A version of the internal rate of return (IRR) adjusted for scale and risk, providing a more accurate reflection of an investment's profitability.

Cost of Capital

The critical rate of return a firm is required to earn on investment projects to hold its market stance and entice financiers.

NPV Method

Net Present Value method, a financial analysis tool used to determine the value of an investment by discounting future cash flows to their present value.