Why Will an Auditor More Extensively Test Controls for the Completeness

question 47

Multiple Choice

Why will an auditor more extensively test controls for the completeness assertion on liability accounts than on asset accounts?

• A) The risk of unrecorded liabilities is greater than the risk of unrecorded assets.
• B) The completeness assertion is not applicable to asset accounts.
• C) The liabilities account balances presented in the financial statements tend to be more complete than the asset accounts.
• D) The most likely type of misstatement for liabilities is overstatements.

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Definitions:

Work-In-Process

Work-in-process (WIP) refers to partially finished goods that are still in the production process at a manufacturing company's inventory.

Payroll

The total amount of wages, salaries, and other earnings paid to employees by a company.

Finished Goods Inventory

The inventory of finished goods available for sale but which remain unsold.

Work-In-Process Inventory

Inventory representing the cost of unfinished goods in the production process at a given point in time.