Which of the Following Is not a Reason for the Special

question 38

Multiple Choice

Which of the following is not a reason for the special significance attached by the auditors to the verification of inventories?

• A)The determination of inventory valuation directly affects net income.
• B)The existence of inventories is inherently difficult to substantiate.
• C)Special valuation problems often exist for inventories.
• D)Inventories are often the largest current asset of an enterprise.

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Definitions:

Trade or Business

Activities conducted for the purpose of income or profit, engaged in consistently and regularly to qualify as deductible business expenses.

Copyright

Legal protection given to creators of original works, including the right to copy, distribute, and adapt the creation.

Schedule D

A tax form used to report capital gains and losses incurred during a specific year.

Form 4797

A tax form used to report the sale or exchange of business property.