Final answer:
The right answer is C) Existence relates to whether amounts included exist,
which verifies the presence of assets and liabilities on the financial statements. Occurrence, denoted in D), ensures that transactions actually happened and are recorded in the correct period. The other options misuse these auditing terms.
Step-by-step explanation:
The correct combination is C) Existence relates to whether amounts included exist. This assertion is about whether assets or liabilities of the company are indeed present at a given date. In auditing, existence is concerned with verifying that the assets and liabilities that are recorded in the financial statements actually exist.
On the other hand, D) Occurrence relates to whether the amounts in accounts occurred in the proper year. Occurrence deals with transactions and events, ensuring that they have indeed taken place and are recorded in the correct accounting period.
The other options, A) and B), use the terms incorrectly. Existence is not about whether amounts are understated, and occurrence does not solely relate to the existence of balances.
The right answer is C) Existence relates to whether amounts included exist,
which verifies the presence of assets and liabilities on the financial statements. Occurrence, denoted in D), ensures that transactions actually happened and are recorded in the correct period. The other options misuse these auditing terms.