I don’t understand A) the question and B) the answer

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  • #3304480
    rdubs
    Participant

    Question: Which of the following procedures best addresses the
    adequacy of presentation and disclosure for inventory of a
    nonissuer?

    Answer:
    a. Obtaining confirmation of inventories that are pledged
    under loan agreements

    The other possible answers:
    b. Observing the company's physical inventory-taking
    procedures.
    c. Tracing the test counts during the physical inventory to the
    final inventory listing.
    d. Examining the inventory turnover ratio and determining
    whether it is in line with similar companies in the industry.

    AUD - 86
    BEC - NINJA in Training
    FAR - 86
    REG - NINJA in Training
    AUD and BEC completed, haven't taken REG and BEC
    #3304891
    kwatts
    Participant

    The question is basically asking what do you need to check that the disclosures are accurate and complete (focusing on the notes). Therefore, any loan agreements are required to be disclosed including what is being used a collateral / pledged.

    I hope that helps.

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