A Client Maintains Perpetual Inventory Records in Both Quantities and Dollars.If

question 60

Multiple Choice

A client maintains perpetual inventory records in both quantities and dollars.If the assessed level of control risk is high,an auditor would probably ________.

• A)insist that the client perform physical counts of inventory items several times during the year
• B)apply gross profit tests to ascertain the reasonableness of the physical counts
• C)increase the extent of tests of controls of the inventory cycle
• D)ask the client to schedule the physical inventory count at the end of the year and with a large number of test counts

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Definitions:

Marginal Benefit

The additional benefit received from consuming one more unit of a good or service.

Overproduction

The condition where production exceeds the demand, leading to surplus inventory, lower prices, and potential economic inefficiencies.

Marginal Benefit

The additional satisfaction or utility gained by consuming or producing one more unit of a good or service.

Marginal Cost

The added expenditure resulting from the production of an extra unit of a good or service.