When the Client's Perpetual Inventory Master Files Are Inadequate, the Auditor

question 36

True/False

When the client's perpetual inventory master files are inadequate, the auditor will probably choose to test the physical inventory prior to the balance sheet date.

---

Definitions:

Cash Dividends

Payments made by a corporation to its shareholder members. It is the share of profits and retained earnings that the company pays out to its shareholders.

Interest Payment

A payment made to a lender by a borrower in exchange for the use of borrowed money, typically calculated as a percentage of the principal.

Accumulated Depreciation

The cumulative depreciation of an asset up to a single point in its life, reflecting the asset's loss in value due to wear and tear, age, or obsolescence.

Operating Activities

The cash flows related to the core operations of a business, including revenues and expenses.