An inventory turnover analysis is useful to the auditor because it may detect:
A)inadequacies in inventory pricing.
B)methods of avoiding cyclical holding costs.
C)the optimum automatic reorder points.
D)the existence of obsolete merchandise.

Question

Quizplus · Accepted Answer

An inventory turnover analysis can identify any slow-moving or obsolete inventory. This is important for the auditor because it can affect the valuation of inventory and therefore the financial statements. The other options do not relate to the main purpose of an inventory turnover analysis.

An Inventory Turnover Analysis Is Useful to the Auditor Because