If a Client Intends to Count Inventory at an Interim

question 108

Multiple Choice

If a client intends to count inventory at an interim date, the auditor should expect there to be all of the following except

• A) controls over the preparation and maintenance of perpetual inventory records.
• B) competent personnel assigned to count the inventory.
• C) third-party inventory counting specialists.
• D) an adequately designed plan to count the inventory.

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Definitions:

Break-Even Sales

The amount of revenue required to cover both the variable and fixed costs of a business, indicating no profit and no loss.

Contribution Margin

The amount by which the sale of a product exceeds its variable costs, contributing to covering fixed costs and generating profit.

Commercial Segment

A portion of a market composed of businesses and organizations, as opposed to individual consumers.

Wholesale Division

A segment of a company that deals with selling goods in large quantities at lower prices, typically to retailers or other businesses rather than direct to consumers.