While observing a client's annual physical inventory,an auditor recorded test counts for several items and noticed that certain test counts were higher than the recorded quantities in the client's perpetual records.This situation could be the result of the client's failure to record
A) Purchase discounts.
B) Purchase returns.
C) Sales.
D) Sales returns.

Question

Quizplus · Accepted Answer

Higher test counts during physical inventory could indicate that the client has not recorded sales returns in their perpetual records. This would result in the recorded quantity being higher than the actual inventory amount during physical count.

While Observing a Client's Annual Physical Inventory,an Auditor Recorded Test