Which of the following is the best audit procedure for the discovery of damaged merchandise in an entity’s ending inventory?

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Which of the following is the best audit procedure for the discovery of damaged merchandise in an entity’s ending inventory?

A. Compare the physical quantities of slow-moving items with corresponding quantities of the prior year.

B. Observe the condition of merchandise and raw materials during the entity’s physical inventory count.

C. Review the management’s inventory representation letter for accuracy.

D. Test overall fairness of inventory values by comparing the company’s turnover ratio with the industry average.

Answer: Observe the condition of merchandise and raw materials during the entity’s physical inventory count

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