Observing the Client's Inventory Taking Enables the Auditor to Establish

question 40

Multiple Choice

Observing the client's inventory taking enables the auditor to establish that:

• A) count tags, sheets or cards are properly controlled.
• B) the client's personnel are complying with the instructions for inventory counts.
• C) items belonging to the client are accurately counted and recorded.
• D) all of the above.

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Definitions:

Significant Influence

The capacity to affect the financial and operating policies of another entity without having full control over it, often through significant ownership.

Investor Ownership

A form of equity representing an individual's or entity's ownership stake in a company, as evidenced by stock or similar securities.

Accounting Guidelines

Established principles and standards that govern financial reporting and bookkeeping practices.

Cost Method

A method of accounting where the investment is recorded at its acquisition cost, without subsequent change to market value.