Rather Than Counting the Entire Inventory at Year-End, a Company

question 39

Multiple Choice

Rather than counting the entire inventory at year-end, a company may make periodic, or cycle counts, of selected inventory items at various times during the year. Which of the following is necessary if the auditor plans to observe inventories at interim dates?

• A) Complete recounts by independent teams are performed.
• B) Perpetual inventory records are maintained.
• C) Unit cost records are integrated with production accounting records.
• D) Inventory balances are rarely at low levels.

---

Definitions:

Dimension Line

A graphical representation in technical drawing, showing the direction and extent of a dimension, typically marked with arrowheads.

Straight Line

The shortest distance between two points; in geometry, it is an infinite number of points along the same direction with no curvature.

Revision Block

A part of the drawing documentation where changes and revisions are recorded.

Millimeter

A unit of length in the metric system equal to one thousandth of a meter.