You Are Auditing a Store That Sells Merchandise

question 34

Multiple Choice

You are auditing a store that sells merchandise. Some of the store merchandise is held on consignment. Which account balance assertion for inventory should you be most concerned about verifying?

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

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Definitions:

Base Year

A specific year chosen as a point of reference for comparing economic data, such as price levels, over time.

Inflation

The tempo at which the general price level of goods and services rises, leading to a fall in the ability to purchase.

Disinflation

A drop in the pace of inflation, showing that the rate at which prices of goods and services climb is slowing down.

Deflation

A decrease in the general price level of goods and services, often indicating a contraction in the economy.