Generally Accepted Auditing Standards Permit Auditors to Place Complete Reliance

question 3

True/False

Generally accepted auditing standards permit auditors to place complete reliance on internal control (zero control risk assessment)to justify the exclusion of substantive audit procedures for a balance sheet or income statement account.

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Definitions:

Inventory Carrying Cost

The total cost associated with holding and storing unsold goods, including storage, insurance, and opportunity costs.

Periodic Inventory Systems

An inventory system that updates inventory levels at specified intervals, requiring physical counts to determine cost of goods sold.

Management Control

Management control refers to the processes and procedures implemented by an organization's management to ensure that its resources are being used effectively and efficiently toward the achievement of its objectives.

Periodic Inventory System

An inventory valuation and management method where updates to inventory levels are made periodically at the end of a specific accounting period.