In Order for an Auditor to Test Ownership of a Client's

question 21

Multiple Choice

In order for an auditor to test ownership of a client's inventories, each of the following substantive tests of details of account balances are appropriate except:

• A) review loan agreements for inventory that has been pledged or assigned.
• B) review sales agreements for bill-and-hold arrangements.
• C) review contracts for inventory held on consignment.
• D) review policy for asset impairment write-downs.

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Definitions:

Court Decree

A formal and authoritative order issued by a court, requiring parties to do or not do something.

Invalidates

To make something legally null and void or to render it ineffective by establishing its incorrectness or inapplicability.

Community Property

A form of ownership between married couples in some states, where assets acquired during the marriage are considered jointly owned.

Separate Property

Property that a spouse owned before the marriage plus inheritances and gifts acquired by the spouse during the marriage.