An Auditor Determines That There Is an Inherent Risk That

question 41

Multiple Choice

An auditor determines that there is an inherent risk that dividends may be recorded and paid before being declared. This determination is most likely tied to which of the following management assertions?

• A)Completeness.
• B)Presentation and disclosure.
• C)Valuation.
• D)Existence.

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Definitions:

Inventory Turnover

A financial ratio measuring how many times a company's inventory is sold and replaced over a period.

Cost of Goods Sold

A duplicated term; refers to the direct costs attributable to the production of the goods sold by a company, including material and labor costs.

Ending Inventory

The value of goods available for sale at the end of an accounting period, after accounting for all sales and purchases during the period.

Average Sale Period

The average amount of time it takes for a company to convert its inventory into sales, reflecting the efficiency and effectiveness of its sales and inventory management.