The Audit Procedures Used in an Observation of the Client's

question 49

Multiple Choice

The audit procedures used in an observation of the client's physical inventory taking are designed primarily to

• A)Test and observe the client's physical count of inventory.
• B)Verify independently the physical counts obtained by the client.
• C)Assist the client in taking test counts of year-end inventory.
• D)Determine whether inventory contains obsolete goods.

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Definitions:

Return on Investment

A measure of the financial gain or profitability of an investment relative to its cost, expressed as a percentage.

Accounts Payable Turnover Ratio

A financial metric that measures how quickly a business pays its suppliers; calculated as cost of goods sold divided by average accounts payable.

Vendors

Entities or individuals that supply goods or services to another company, often playing a crucial role in the supply chain.

Timely Manner

Completing or achieving something within the expected or allocated time.