From the auditor's point of view, inventory counts are more acceptable prior to the year-end when:
A)accurate perpetual inventory records are maintained.
B)control risk is high.
C)significant amounts of inventory are held on a consignment basis.
D)inventory turnover has decreased from the prior year.

Question

Quizplus · Accepted Answer

Accurate perpetual inventory records allow the auditor to rely on the client's records and reduce the need for extensive physical inventory counts. In contrast, if control risk is high, increased testing would be required regardless of when the inventory counts occur. Consignment inventory and inventory turnover rates do not directly impact the timing or acceptability of inventory counts.

From the Auditor's Point of View, Inventory Counts Are More