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:

Negative Externality

A cost that affects a party who did not choose to incur that cost, often seen in environmental pollution where the public bears the cost not reflected in the market price.

Lawn Mowing

Lawn mowing refers to the act of cutting or trimming the grass in a lawn to maintain its appearance and health, often performed as a routine landscaping activity.

External Costs

Costs of a transaction that affect people other than the buyer or seller and are not reflected in the prices.

Full Costs

Full costs encompass all expenses associated with producing a product or offering a service, including both direct and indirect costs.