While Observing a Client's Annual Physical Inventory,an Auditor Recorded Test

question 52

Multiple Choice

While observing a client's annual physical inventory,an auditor recorded test counts for several items and noticed that certain test counts were higher than the recorded quantities in the client's perpetual records.This situation could be the result of the client's failure to record

• A) Purchase discounts.
• B) Purchase returns.
• C) Sales.
• D) Sales returns.

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Definitions:

Bank Requirement

Specific conditions imposed by a bank on a borrower or account holder, including minimum balances and fees.

Risk Assessment

The identification, evaluation, and prioritization of risks followed by coordinated efforts to minimize, monitor, and control the probability or impact of unfortunate events.

Internal Control

The processes and procedures implemented by a company to safeguard its assets, ensure accurate and reliable financial reporting, and promote compliance with laws and regulations.

Vulnerabilities Analysis

A process of identifying, quantifying, and prioritizing (or ranking) the vulnerabilities in a system, such as in information technology systems or energy supply systems.