Which of the following audit objectives relates primarily to the financial report assertion, rights and obligations?
A)Inventories are properly classified in the statement of financial position as current assets.
B)Inventories exclude items billed to customers or owned by others.
C)Slow-moving and obsolete items included in inventories are properly identified.
D)Inventory quantities include all products, materials and supplies owned by the company.

Question

Quizplus · Accepted Answer

The audit objective that relates primarily to the financial report assertion of rights and obligations is the one that ensures that inventories exclude items that are billed to customers or owned by others. This is because the assertion of rights and obligations deals with whether the assets and liabilities reported in the financial statements are properly owned or owed by the company. By ensuring that only items that are owned by the company are included in inventories, the auditor is fulfilling this objective. The other objectives listed in the question relate to different financial report assertions.

Which of the Following Audit Objectives Relates Primarily to the Financial