Which of the Following Audit Procedures Would Provide the Least

question 17

Multiple Choice

Which of the following audit procedures would provide the least reliable evidence that the client has legal title to inventories?

• A) Confirmation of inventories at locations outside the client's facilities.
• B) Analytical review of inventory balances compared to purchasing and sales activities.
• C) Observation of physical inventory counts.
• D) Examination of paid vendors' invoices.

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Definitions:

Balance Sheet Impact

Represents the effect of transactions and events on the financial position of a business as shown in its balance sheet.

Perpetual FIFO

A perpetual inventory system that continuously updates inventory records, using the "First In, First Out" method to determine the cost of goods sold and inventory valuation.

Ending Inventory

The final value of goods available for sale at the end of an accounting period.

Cost Calculation

The process of determining the total cost incurred to produce goods or deliver services, factoring in both direct and indirect expenses.