In Obtaining an Understanding of a Manufacturing Entity's Internal Control

question 44

Multiple Choice

In obtaining an understanding of a manufacturing entity's internal control concerning inventory balances, an auditor most likely would:

• A)review the entity's description of inventory policies and procedures.
• B)perform test counts of inventory during the entity's physical count.
• C)analyze inventory turnover statistics to identify slow-moving and obsolete items.
• D)analyze monthly production reports to identify variances and unusual transactions.

---

Definitions:

Prolonged Retention

Prolonged retention refers to the ability to maintain information in memory over extended periods of time.

Conscious Effort

The deliberate use of one's attention and energy to perform a specific task.

Consolidation

The process by which memories become stable in the brain; a process believed to be linked with sleep.

Declarative Memories

Memories that can be consciously recalled, such as facts and events, and are part of the explicit memory system.