When Perpetual Inventory Records Are Maintained in Quantities and in Dollars

question 45

Multiple Choice

When perpetual inventory records are maintained in quantities and in dollars and internal control over inventory is weak, the auditor would probably:

• A)want the entity to schedule the physical inventory count at the end of the year.
• B)insist that the entity perform physical counts of inventory items several times during the year.
• C)increase the extent of tests for unrecorded liabilities at the end of the year.
• D)have to disclaim an opinion on the income statement for that year.

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Definitions:

Common Stock

Equity securities that represent ownership in a corporation, giving shareholders voting rights and a residual claim on corporate earnings in the form of dividends.

Authorized

Pertains to the maximum number of shares a corporation is legally permitted to issue, as specified in its charter.

Stated Value

An assigned value to no-par value stock by the company for accounting purposes, often used to meet state regulations.

Common Stock

A type of equity security that represents ownership in a corporation, entitling holders to a share of the company's profits and voting rights.