An Auditor Selected a Product Recorded in the Finished Goods

question 45

Multiple Choice

An auditor selected a product recorded in the finished goods perpetual inventory subsidiary account. The auditor went to the warehouse and counted the product and compared this amount with the amount in the finished goods perpetual inventory subsidiary account. Which ASB balance assertion is the auditor most likely testing?

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

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Definitions:

Sales Budget

An estimate of the expected sales revenue for a certain period of time, often used as a plan for business operations and resource allocation.

Capital Expenditures Budget

A budget that outlines projected spending on fixed assets over a period, including purchases of property, equipment, and other long-term investments.

Production Budget

A financial plan that estimates the costs associated with the production process, including materials, labor, and overhead, within a specific period.

Direct Materials Purchases Budget

A budget that estimates the quantities of direct materials to be purchased to support budgeted production and desired inventory levels.