Which assertion do auditors test when they test for the adequacy of the provision for doubtful debts?
A) valuation and allocation
B) rights and obligations
C) classification
D) occurrence

Question

Quizplus · Accepted Answer

When auditors test for the adequacy of the provision for doubtful debts, they are testing the valuation and allocation assertion. This assertion ensures that the provision is accurately valued and allocated to the correct accounts. The rights and obligations assertion relates to the entity's legal rights and obligations, classification assertion relates to the correct presentation of financial information, and occurrence assertion relates to whether the transactions actually occurred. None of these are directly related to testing the adequacy of the provision for doubtful debts.

Which Assertion Do Auditors Test When They Test for the Adequacy