Which of the Following Is Not Required for Establishing an Auditor's

question 16

Multiple Choice

Which of the following is not required for establishing an auditor's liability for negligence?

• A)An undetected material misstatement.
• B)Failure to exercise due care.
• C)A connection between the auditor's negligence and a plaintiff's loss.
• D)A duty to conform to a standard of care.

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Definitions:

Weighted Average Inventory

This accounting method calculates the cost of inventory based on the average cost of all similar items in the inventory, weighted by the quantity of each item purchased.

Periodic Inventory System

An accounting method where inventory is physically counted and valued at specific intervals, used to determine cost of goods sold and ending inventory.

FIFO

"First In, First Out," an inventory valuation method where the first items placed into inventory are the first sold.

LIFO

An accounting method for valuing inventory that assumes the last items produced or purchased are the first ones sold.