1. Which of the following statements is true regarding an auditor's role in their client's annual physical inventory?

I. The auditor should be present to conduct the inventory count.

II. The auditor should satisfy him/herself that the methods used to count the inventory are effective and reasonable.

a) I only

b) II only

c) Both I and II

d) Neither I nor II

2. When auditing the valuation assertion for inventory, which of the following risks would typically need to be considered?

I. The risk that the client has improperly followed the selected method of inventory costing (e.g., LIFO, FIFO, etc.,).

II. The risk that finished goods in inventory can only be sold at prices lower than their acquisition cost.

a) I only

b) II only

c) Both I and II

d) Neither I nor II