A Client Maintains Perpetual Inventory Records in Both Quantities and Dollars.If

question 60

Multiple Choice

A client maintains perpetual inventory records in both quantities and dollars.If the assessed level of control risk is high,an auditor would probably ________.

• A)insist that the client perform physical counts of inventory items several times during the year
• B)apply gross profit tests to ascertain the reasonableness of the physical counts
• C)increase the extent of tests of controls of the inventory cycle
• D)ask the client to schedule the physical inventory count at the end of the year and with a large number of test counts

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Definitions:

Future Dividends

Predicted payments made by a corporation to its shareholders out of its earnings in the future.

Stock Split

An action by a company to divide its existing shares into multiple shares to boost the liquidity of the shares, although the firm's overall market capitalization remains unchanged.

Common Stockholders' Equity

The portion of a company's equity that is held by common shareholders, representing ownership interest.

Balance Sheet

A financial statement that displays a company's assets, liabilities, and shareholders' equity at a specific point in time.