Audit Committees Should Consider All Factors That Might Affect the Independence

question 66

True/False

Audit committees should consider all factors that might affect the independence of the external auditor and should not approve nonaudit services that they believe might impair independence.

---

Definitions:

Inventory Valuation

The method used to assign cost to inventory for the purposes of accounting, vital for determining cost of goods sold and ending inventory values.

Net Realizable Value

The estimated selling price of goods minus the costs of their sale or disposal, used in assessing the value of inventory and receivables.

Replacement Cost

The cost to replace an asset or item at current market prices, without deduction for depreciation.

Periodic Inventory System

An inventory accounting system where the inventory balance is updated at the end of the accounting period through a physical count.