Question
M&M Meat Shops sells vacuum-sealed meat and ready-to-cook meals. All inventory is stored in the warehouse deep freezer before it shipped to the retail stores.
M&M Meat Shops sells vacuum-sealed meat and ready-to-cook meals. All inventory is stored in the warehouse deep freezer before it shipped to the retail stores. Each quarter, KMV Accountants attends the quarter-end inventory count at the M&M warehouse. Because the deep freezer is very cold, M&M provides special parkas for the auditors to wear to help them stay warm during the inventory count (which typically takes 4 to 6 hours). However, during this quarter's count, the Company only had one parka for the four auditors that several parkas were missing, and the four auditors would have to share one parka. What should the auditors consider during the inventory count.
Select one:
a. The auditors should be vigilant but don't have anything additional to consider compared to any other inventory count.
b. The company may be trying to rush the auditors through the inventory count. The auditors should keep alert for fictitious or obsolete inventory.
c. The auditors shouldn't be too concerned about fraud during the inventory count because it isn't very hard to count the number of items on each shelf and ensure that the inventory ledger is accurate.
d. Commonly employees may be stealing the parkas to wear when they are not at work.
e. Purchase discounts for some of the inventory may not have been correctly recorded.
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