The principle of lower of cost or market and the potential obsolescence of inventory are a concern for the audit team as
A)they are uncommon and may not exist.
B)they are a burden to the auditor in the undue amount of work caused.
C)they are likely to occur in the last month of the year and cause cutoff problems.
D)they are an inherent component of complexity related to valuation.

Question

Quizplus · Accepted Answer

The principle of lower of cost or market and the potential obsolescence of inventory are inherent components of complexity related to valuation. Auditors must consider the potential impact of these factors on the company's financial statements and ensure that proper accounting methods are being used. While it may require additional work, it is necessary for auditors to address these issues to ensure that the financial statements are fairly presented.

The Principle of Lower of Cost or Market and the Potential