Question

In the audit of inventory, selecting inventory items from a perpetual master file, going to the locations, and obtaining test counts is intended to produce evidence for which audit assertion?

a) Completeness
b) Existence
c) Valuation
d) Rights and Obligations

Answer 1

Selecting inventory items and obtaining test counts during an inventory audit provides evidence for the existence of audit assertion. Therefore, the correct option is b).

Step-by-step explanation:

When auditing inventory, selecting inventory items from a perpetual master file, going to the locations, and obtaining test counts are intended to produce evidence for the existence of audit assertion. This means that the auditor is gathering evidence to determine whether the inventory items actually exist and are present at the locations stated in the master file. The auditor is verifying that the recorded inventory amounts are real and tangible.

Therefore, the correct option is b).