Question

During the audit of Thompson Trucking, Corp., the auditors inspected purchase contracts for several trucks to determine ownership. Which assertion was the auditor most likely addressing?

1) Rights and obligations
2) Accuracy
3) Classification
4) Cutoff

Answer 1

The auditors were likely addressing the rights and obligations assertion by examining purchase contracts to confirm Thompson Trucking, Corp.'s legal ownership and responsibilities for the trucks. Correct answer is 1.

Step-by-step explanation:

When the auditors of Thompson Trucking, Corp. inspected purchase contracts for several trucks to determine ownership, they were most likely addressing the rights and obligations assertion.

This assertion is concerned with whether the entity has the rights to assets and whether liabilities are the obligations of the company. By inspecting purchase contracts, auditors aim to verify that the company has legal ownership of the trucks and is entitled to any associated benefits, and that it has the corresponding responsibilities related to these assets.