Substantive Tests Must Be Designed to Tests Specific Audit Objectives

question 16

Multiple Choice

Substantive tests must be designed to tests specific audit objectives.
REQUIRED: For the following specific audit procedures, indicate the assertion that is being tested. Use the following letters, placing your response in the space provideD.
-Ascertain that the financial statements comply with the industry practice of
presenting a classified balance sheet.

• A)Existence or occurrence
• B)Completeness
• C)Valuation or allocation
• D)Rights and obligations
• E)Presentation and disclosure

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Definitions:

Ceteris Paribus

A Latin phrase meaning "all other things being equal," used in economics to analyze the effect of one variable change while holding others constant.

Perfectly Competitive Industry

A market structure where there are many buyers and sellers, products are identical, and there is free entry and exit from the market.

Identical Products

Products that are exactly the same in every aspect, including quality, size, and features, making them perfectly substitutable for one another.

Perfectly Elastic Demand

A market situation where demand for a product is infinitely responsive to changes in price, depicted by a horizontal demand curve.