Concluding That the Book Value of Inventory Is Correct When

question 30

Multiple Choice

Concluding that the book value of inventory is correct when it is materially misstated is an example of which of the following risks?

• A)Incorrect rejection.
• B)Incorrect acceptance.
• C)Insufficient sample size.
• D)None of the above.

---

Definitions:

Purchase Commitments

Agreements to buy goods or services at a predetermined price, often specifying quantity and delivery dates.

Gross Profit Method

This is an accounting technique used to estimate inventory value, calculating gross margin as a percentage of sales to find the cost of goods sold and ending inventory.