21. There must be a periodic physical count by the client of the inventory items on hand

A) only if the client uses the LIFO flow assumption.

B) only if client uses a lower-of-cost-or-market method.

C) regardless of the clients inventory cost flow assumptions.

D) only if the client uses either the LIFO or FIFO flow assumption.

22. When may auditors test the physical inventory?

A) At an interim date.

B) At year-end.

C) Both (A) and (B).

D) Neither (A) or (B).

23. Which of the following manipulations would understate receivables on the financial statements?

A) Understatement of cash sales.

B) Closing the sales journal prior to year-end.

C) Closing the cash receipts journal prior to year-end.

D) Underestimating the allowance for doubtful accounts (AFDA account).

24. Which of the following is not true about the confirmation of accounts receivable?

A) Confirmation requests should bear the auditors' return address.

B) Confirmation requests should be prepared and approved by clients controllers office.

C) Confirmation requests should be mailed directly by the auditors.

D) Confirmation requests should include a return envelope addressed to the office of the auditors.