Which Are the Two Audit Assertions Considered Most Important to the Auditor

question 11

Multiple Choice

Which are the two audit assertions considered most important to the auditor concluding there are no material misstatements in trade receivables at year-end?

• A) Valuation and allocation, and rights and obligations
• B) Existence and occurrence
• C) Occurrence and rights and obligations
• D) Existence and valuation and allocation

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Definitions:

Income Summary

An account used in the closing process that aggregates all income and expense accounts to determine the net profit or loss.

Net Income

The total profit of a business after all expenses and taxes have been deducted from total revenue.

Owner's Capital

The amount of equity a business owner has invested in the business minus any withdrawals made from the business by the owner.

Cash Balance

The amount of cash a company has available, reflecting the total amount of cash and cash equivalents at a given point in time.