Which of the following is the best audit procedure for the discovery of damaged merchandise in an entity's ending inventory?
A. Review the management's inventory representation letter for accuracy.
B. Observe the condition of merchandise and raw materials during the entity's physical inventory count.
C. Test overall fairness of inventory values by comparing the company's turnover ratio with the industry average.
D. Compare the physical quantities of slow-moving items with corresponding quantities of the prior year.
Answer: B
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