With a Manufacturer, Wholesaler, or Retailer, However, Inherent Risk for Inventory

Multiple Choice

With a manufacturer, wholesaler, or retailer, however, inherent risk for inventory may be assessed at or near the maximum level for all of the following reasons except:

A) inventories are often stored at multiple sites, adding to the difficulties associated with maintaining physical controls over theft and damages, and properly accounting for goods in transit between sites.
B) the wide diversity of inventory items may present special problems in determining their quality and market value.
C) inventories are vulnerable to spoilage, obsolescence, and other factors such as general economic conditions that may affect demand and salability, and thus the proper valuation of the inventories.
D) inventory may be sold subject to right of return and repurchase agreements.
E) the volume of purchases, manufacturing, and sales transactions that affects these accounts is generally high, decreasing the opportunities for misstatements to occur.