An Auditor Selected an Invoice for a Large Inventory Purchase

question 29

Multiple Choice

An auditor selected an invoice for a large inventory purchase and vouched the invoice to the receiving report. Which ASB transaction assertion is the auditor most likely testing?

• A)Occurrence
• B)Completeness
• C)Rights and obligations
• D)Valuation

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Definitions:

Current Liabilities

Short-term financial obligations that are due to be paid within one year or within the normal operating cycle of a business.

Acid-Test Ratio

A liquidity ratio, also known as the quick ratio, that measures a company's ability to pay off its current liabilities with its quick assets (cash, marketable securities, and accounts receivable).

Stockholders' Equity

The remaining value of a corporation's assets once liabilities are subtracted, which signifies the share of ownership held by the shareholders.

Prepaid Expenses

Expenses paid for in advance and recorded as assets before they are used or consumed.