When Testing the Valuation Assertion,the Auditor Would Most Likely

question 36

Multiple Choice

When testing the valuation assertion,the auditor would most likely

• A)confirm inventory on consignment.
• B)examine receiving reports for inventory,tracing them recorded amounts.
• C)observe the taking of physical inventory.
• D)perform price tests to the related cost flow assumption.

---

Definitions:

Net Realizable Value

The estimated selling price of goods minus the cost of their sale or disposal, reflecting the net cash expected to be generated.

Highly Inflationary Economy

An economic condition characterized by a cumulative inflation rate over three years approaching or exceeding 100%, significantly impacting financial reporting.

Cumulative Inflation

The total change in the price level of goods and services in an economy over a set period of time, typically resulting in a decrease in purchasing power of the currency.

Temporal Method

An accounting method used to translate foreign currency financial statements into the reporting currency of a parent company, focusing on the timing of transactions.