ICAEW ARF · Chapter 7 · Question 3 of 11
An auditor selects items from the client's inventory records and physically inspects them in the warehouse. Which assertion does this procedure mainly test?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Existence
Explanation
Testing from the records to the physical items checks that recorded inventory actually exists. Testing in the opposite direction, from the physical items to the records, tests completeness. Physical inspection may give some evidence of condition, but valuation is mainly tested by examining costs and selling prices.
More Assertions and audit evidence MCQs
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