You are working in an enterprise.
Assuming that your enterprise periodically compares finished goods inventory levels to the perpetual inventories in its ERP system.
What kind of information is being provided by the lack of any significant differences between perpetual levels and actual levels?
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A. B. C. D.B.
The lack of any significant differences between perpetual levels and actual levels provides indirect information that its billing controls are operating.
It does not provide any direct information.
Incorrect Answers: A: It does not provide direct information as there is no information about the propriety of cutoff.
C, D: These are not the types of information.
The lack of significant differences between the perpetual inventories in the ERP system and the finished goods inventory levels provides indirect information to the enterprise.
Perpetual inventory is a method of tracking inventory levels in real-time through the use of an ERP system. It is an ongoing record of the quantity and value of inventory that is updated continuously as transactions occur. On the other hand, finished goods inventory is the amount of products that are ready to be sold or shipped to customers.
By comparing the perpetual inventory levels with the actual finished goods inventory levels, the enterprise can gain insights into the effectiveness of its inventory management processes. If there are significant differences between these two levels, it may indicate issues such as stockouts, overstocking, or errors in the ERP system.
However, if there are no significant differences between these two levels, it can provide indirect information that the enterprise's inventory management processes are functioning efficiently. This means that the enterprise has a better understanding of its inventory levels, which can lead to improved decision-making and cost savings.
Therefore, the correct answer to this question is B. Indirect information. The lack of significant differences between perpetual and actual inventory levels provides indirect information to the enterprise about the effectiveness of its inventory management processes. It does not provide direct information, risk management plan, or risk audit information.