The rights and obligations assertion relates to which of the following audit objectives?
A) Inventory is properly classified, described and disclosed in the financial report
B) The entity owns, or has the legal right to, all of the inventory on the balance sheet
C) All inventory on the inventory listing is included in the financial report
D) All inventory owned by the entity at year-end is included on the balance sheet

Question

Quizplus · Accepted Answer

The rights and obligations assertion relates to ensuring that the entity owns, or has the legal right to, all of the inventory on the balance sheet. This means that the inventory is not currently subject to any liens or other encumbrances that would prevent the entity from using or selling it. Options A, C, and D relate to different assertions such as completeness, accuracy, and existence, but not rights and obligations.

The Rights and Obligations Assertion Relates to Which of the Following