If most companies in the industry use FIFO inventory valuation and straight-line depreciation,and the audit client uses weighted-average cost inventory valuation and double-declining balance,comparisons of client and industry data
A)will be a meaningful highlight of the result of these differences in accounting methods.
B)will enable the auditor to spot errors but not irregularities.
C)will enable the auditor to spot irregularities but not errors.
D)may not be meaningful,affecting the comparability of data.

Question

Quizplus · Accepted Answer

Since the client uses different accounting methods compared to the industry, comparisons of client and industry data may not be meaningful and affect the comparability of data. It does not necessarily mean that there are errors or irregularities in the client's financial statements, but it may make the auditor's evaluation of the client's financial performance and position more challenging. Therefore, the best choice is D.

If Most Companies in the Industry Use FIFO Inventory Valuation