The Applicable Financial Reporting Framework Allows the Audit Client to Determine

question 16

Multiple Choice

The applicable financial reporting framework allows the audit client to determine both the cost and market value of inventory.Select the correct item(s) from the following list regarding these determinations:

• A)The client must use FIFO to determine the cost of inventory at year-end.With FIFO,the client determines the cost of good sold using the earliest inventory items purchased.
• B)The client must use FIFO to determine the cost of inventory at year-end.With FIFO,the client determines the cost of good sold using the latest inventory items purchased.
• C)The client determines the market value of the inventory by using the last purchase price of the inventory item to estimate the market value.
• D)The client determines the market value of inventory by estimating the amount the inventory can be sold for at the end of the year.

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Definitions:

Manufacturing Sector

The segment of an economy that is involved in the production of goods using labor, machinery, and tools.

Developing Countries

Refers to nations with lower levels of income, industrialization, and often a lower Human Development Index compared to developed countries.

Industrial Market Countries

Nations with economies mainly based on industrial production and services, with advanced technological infrastructure.

Labor Force

The labor force consists of all the working-age population who are willing and able to work, including both employed and unemployed individuals.