Which of the Following Is the Best Audit Procedure for the Discovery

question 12

Multiple Choice

Which of the following is the best audit procedure for the discovery of damaged merchandise in an entity's ending inventory?

• A)Compare the physical quantities of slow-moving items with corresponding quantities of the prior year.
• B)Observe the condition of merchandise and raw materials during the entity's physical inventory count.
• C)Review the management's inventory representation letter for accuracy.
• D)Test overall fairness of inventory values by comparing the company's turnover ratio with the industry average.

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Definitions:

Shannon-Weaver

A model of communication originally developed to explain the process of information transmission through technical systems but also applied to human communication.

Decoder

A device or process that converts encoded information or signals back into a form that is understandable by humans or machines.

Encoder

A device or algorithm that converts information from one format or code into another, often for the purpose of standardization, speed, secrecy, or compressions.

Written Communication

Messages communicated through the written word, such as e-mails, reports, memos, letters, and other channels.