How Would an Auditor Generally Measure the Value of a Stock

question 28

Multiple Choice

How would an auditor generally measure the value of a stock option expense?

• A)Fair value.
• B)Appraised value.
• C)By computing a weighted average value of all classes of stock authorized.
• D)All of these methods can be used.

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Definitions:

Periodic Inventory System

An inventory accounting system where updates to inventory levels are made on a periodic basis, not continuously, through physical counts.

Ending Inventory Cost

The total value of all goods available for sale at the end of an accounting period, calculated using a specific inventory costing method like FIFO or LIFO.

Physical Inventory

A process of counting and verifying the actual inventory on hand at a specific time, typically used to validate inventory records and adjust discrepancies.

Periodic System

An inventory tracking system that updates inventory balances after a specific period, based on physical inventory counts.