Question

An outside auditing firm annually supervises a physical count of the items in a retail store's shelf inventory. This is an example of:

1) authorizing events
2) executing events
3) recording events
4) safeguarding resources

Answer 1

The supervision of a retail store's inventory count by an outside auditing firm is an example of safeguarding resources, a part of internal controls for accurate financial reporting and asset security

Step-by-step explanation:

The annual physical count of the items in a retail store's shelf inventory supervised by an outside auditing firm is an example of safeguarding resources. This process is crucial as it helps ensure that the reported inventory levels match the actual physical inventory, thereby preventing discrepancies, inventory shrinkage due to theft, damage, or error, and ensuring that the financial records are accurate. Safeguarding resources is a part of internal control mechanisms that businesses put in place to secure their assets and provide reliable financial reporting, which ultimately contributes to sound corporate governance.