In accounting for inventory, the quality of estimates made by a client's management is directly related to:
A) the likelihood of error in the allocation of common costs.
B) the strength of internal controls of the inventory process.
C) the degree of sophistication of the client's automated inventory processes.
D) the number of tags or count sheets used in the client's physical inventory count.

Question

Quizplus · Accepted Answer

The quality of estimates made by a client's management in accounting for inventory is directly related to the strength of internal controls of the inventory process. Good internal controls increase the accuracy and reliability of inventory records, which in turn enables management to provide more accurate estimates of the inventory's value.

In Accounting for Inventory, the Quality of Estimates Made by a Client's