There Are Five General Transaction-Related Audit Objectives

question 89

Essay

There are five general transaction-related audit objectives.One is the existence objective, which deals with whether recorded transactions have actually occurred.Identify and discuss each of the remaining general transaction-related audit objectives.

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Definitions:

Adverse Selection

A situation where sellers have information that buyers do not have, or vice versa, leading to an inefficient market outcome.

Health Insurance Market

The marketplace in which individuals, families, and employers purchase health insurance policies to offset the cost of medical care.

Asymmetric Information

A situation in which one party in a transaction has more or better information than the other, often leading to an imbalance in the transaction.

Adverse Selection

A situation where the lack of symmetric information between buyers and sellers leads to transactions in which less desirable goods or services are more likely to be selected.