CAF-8 · Chapter 9 · Question 7 of 10
An auditor is observing the physical inventory count and notices that goods belonging to a third party (consignment stock) are being counted as part of the company's own stock. Which assertion is being violated?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Rights and Obligations
Explanation
Rights and obligations address whether the entity holds or controls the rights to the assets. Third-party stock should not be recorded as the company's asset because the company does not own it.
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