Which of the Following Is the Best Audit Procedure for the Discovery

question 12

Multiple Choice

Which of the following is the best audit procedure for the discovery of damaged merchandise in an entity's ending inventory?

• A)Compare the physical quantities of slow-moving items with corresponding quantities of the prior year.
• B)Observe the condition of merchandise and raw materials during the entity's physical inventory count.
• C)Review the management's inventory representation letter for accuracy.
• D)Test overall fairness of inventory values by comparing the company's turnover ratio with the industry average.

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Definitions:

Quality Assurance

The maintenance of a desired level of quality in a service or product, especially by means of attention to every stage of the process of delivery or production.

Paired Samples

Two related samples that are typically used in experiments where the members are matched or related in some way, often in before-and-after measurements.

Confidence Interval

A span of quantities, obtained from evaluating sample statistics, envisaged to enfold the value of an unascertained population characteristic.

Margin of Error

The range of values below and above a sample statistic in a survey that estimates the reliability or precision of the sample statistic as an approximation of the population parameter.