When Auditing Merchandise Inventory at Year-End,the Auditor Performs Audit Procedures

question 110

Multiple Choice

When auditing merchandise inventory at year-end,the auditor performs audit procedures to obtain evidence that no goods held on consignment are included in the client's ending inventory balance.This audit procedure provides assurance about which management assertion?

• A) Completeness.
• B) Existence.
• C) Valuation and allocation.
• D) Rights and obligations.
• E) Occurrence.

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Definitions:

Articles of Incorporation

A document that establishes a corporation's existence, filed with a government body in the country or state of incorporation.

Corporate Bylaws

Formal rules governing the management and operations of a corporation, established by the board of directors.

Intrinsic Value

The inherent worth of a company, stock, or other financial asset, determined through fundamental analysis without reference to its market value.

Going Public

The act of selling stock to the public at large by a closely held corporation or its principal shareholders.