32. Which of the following approaches for determining fair value of Level 3 assets is used by the auditor?

a. Determining appropriate model and sensitivity of model.

b. Reviewing contracts to determine if loss is other than temporary.

c. Performing an analysis of volume of trading activity.

d. Performing an analysis of trades on similar assets.

33. Understatement of either purchases or ending inventory will result in a lower cost of goods

sold and higher net income.

a. True

b. False

34. Inventory turnover is often calculated by the auditor for proper disclosure in client

financial statements.

a. True

b. False

35. In an audit where there is a heightened risk of fraud related to inventory, the auditors may

want to observe all inventory locations simultaneously.

a. True

b. False

36. When a purchasing agent benefits personally by accepting payment from a vendor, the

purchasing agent is guilty of which of the following?

a. Performing kiting.

b. Committing embezzlement.

c. Receiving kickbacks.

d. Stealing company assets.

37. Which of the following is not a management assertion relevant to inventory?

a. Existence or occurrence.

b. Completeness.

c. Rights and obligations.

d. Accuracy.