The Auditor May Discover That the Recorded Cost of Inventory

question 78

Multiple Choice

The auditor may discover that the recorded cost of inventory exceeds the designated market price when testing which assertion?

• A)Existence.
• B)Cutoff.
• C)Valuation.
• D)Rights.

---

Definitions:

Depreciation

The method of allocating the cost of a tangible asset over its useful life, reflecting wear and tear, decay, or obsolescence.

Mortgage Interest

The interest charged on a loan used to purchase a property, which is often tax-deductible up to certain limits for the buyer's primary residence.

Insurance

A financial product that provides protection against financial losses from specific risks, such as accidents, theft, or illness.

Repairs

Expenditures to restore property or equipment to its previous operating condition without materially adding to its value.