TEST COUNT Definition

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TEST COUNT, in inventory audits, is where a test count is inventory counted by the auditors to check the client's count.

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NORMAL LOSS takes into account the nature of many process operations is such that the output volume is frequently less than the input volume. Because process operations are repetitive, the level of 'losses' of materials/product that could reasonably be expected under efficient operating conditions may be established. This is referred to as a 'normal' loss; one that is an inevitable consequence of the process operation under efficient operation conditions and is thus considered unavoidable. Losses greater (ABNORMAL LOSS) or less (ABNORMAL GAIN) than normal are referred to as 'abnormal' and result from reduced or greater efficiency.

STRATIFY is to arrange a population or a sample in distinct layers. Stratified sampling is used in auditing to select a greater percentage of accounts with high balances than of accounts with low balances.

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