Camilla is preparing the audit program for the inventory of Summers,a large department store.Camilla listed "select a sample of invoices from suppliers to verify that the risks and rewards of the inventory were transferred to Summers." Camilla is concerned that some of the inventory in the store might be on consignment.The account balance-related objective that Camilla is concerned about is
A)rights and obligation.
B)accuracy.
C)valuation.
D)existence.

Question

Quizplus · Accepted Answer

The account balance-related objective that Camilla is concerned about is rights and obligation, which involves verifying that Summers owns the inventory and has the right to use or sell it. This is particularly relevant in cases where inventory is held on consignment, as the legal title and risks and rewards of the goods may still lie with the consignor, and not with Summers. Verifying the invoices from suppliers is a way to gather evidence to support the assertion of rights and obligation. Accuracy, valuation, and existence are other important account balance-related objectives, but they are not the primary concern in this scenario.

Camilla Is Preparing the Audit Program for the Inventory of Summers,a