An Inventory Turnover Analysis Is Useful to the Auditor Because

question 60

Multiple Choice

An inventory turnover analysis is useful to the auditor because it may detect:

• A)Inadequacies in inventory pricing.
• B)Methods of avoiding cyclical holding cost.
• C)The optimum automatic reorder points.
• D)The existence of obsolete merchandise.

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Definitions:

Net Operating Income

A financial metric that calculates how much profit a business generates from its regular operational activities, excluding non-operating income and expenses.

Operating Loss

A financial situation indicating a company's expenses have surpassed its revenue from operations, resulting in a negative operating income.

Absorption Costing

A costing approach that incorporates all costs related to manufacturing, including both fixed and variable costs, into the price of a product.

Unit Product Cost

The total expense incurred to produce, manufacture, or acquire a single unit of a product, including direct labor, materials, and overhead costs.