How Does the Auditor Gather Evidence During the Physical Inventory

question 78

Multiple Choice

How does the auditor gather evidence during the physical inventory count?

• A)The auditor determines that the items on hand that are not owned by the client are counted.
• B)The auditor begins the test count process after the client has finished counting the inventory.
• C)The auditor observes that all inventory has been tagged and counted.
• D)The auditor observes that client personnel are performing test counts in the areas where they are most familiar with the inventory.

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Definitions:

Accounts

Financial records of a company's transactions, categorized into assets, liabilities, equity, revenue, and expenses.

Generally Accepted Accounting Principles

A set of accounting rules and standards used in the preparation of financial statements to ensure consistency and comparability.

Double-entry System

An accounting technique which records each transaction as both a credit and a debit in different accounts, ensuring the accounting equation remains balanced.

Logical Method

A reasoned, systematic approach to solving problems or making decisions, often based on a sequence of steps or a set of established principles.