The Applicable Financial Reporting Framework Allows the Audit Client to Determine

question 56

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)Because the market value of inventory is the most reliable measure of the value of the inventory,the market value of inventory is always stated at year-end.
• 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:

Finance

The study of money; how it’s made, how it’s lost, and how it’s managed.

Delegation of Authority

The process by which responsibility and authority are transferred from one person or group to another, often to ensure tasks and decisions are made effectively.