LMartinez,CPA,was Auditing a Client,Marvelous Retail Company and Selected a Sample

question 77

Multiple Choice

L.Martinez,CPA,was auditing a client,Marvelous Retail Company and selected a sample of inventory items from the perpetual records and vouched additions to receiving reports.This procedure was intended to satisfy which POCAOB assertion?

• A)Rights and obligations.
• B)Completeness.
• C)Existence or occurrence.
• D)Valuation or allocation.

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Definitions:

Physical Inventory

The process of counting and verifying all the physical goods and merchandise a company has in stock at a particular time.

Cost of Inventory

The total cost incurred to acquire inventory, including purchase price, taxes, and transportation.

Condensed Income Statement

A simplified financial statement summarizing a company's revenues, expenses, and net income, without detailed line items.

Net Income

The total earnings of a company after subtracting all expenses, taxes, and losses from total revenue.