The client may use a variety of methods to overstate inventory.These include
A)inaccurate purchase history
B)inaccurate inventory expense recording
C)incorrect recognition of manufacturer rebates
D)incorrect LIFO reserve calculations
E)writing off obsolete inventory
F)both A and B
G)both C and D

Question

Quizplus · Accepted Answer

Incorrect recognition of manufacturer rebates and incorrect LIFO reserve calculations are both methods that can be used to overstate inventory. Inaccurate purchase history and inventory expense recording could potentially impact the accuracy of inventory, but they would not necessarily result in an overstatement. Writing off obsolete inventory would have the opposite effect and would actually decrease the reported value of inventory.

The Client May Use a Variety of Methods to Overstate