Final answer:
Reading the footnote disclosures to check inventory valuation methods uses Inspection of Documents as audit evidence and satisfies the Valuation balance-related audit objective.
Step-by-step explanation:
When conducting an audit, auditors use various types of audit evidence to support their conclusions about the financial statements. In the audit procedure of reading the footnote disclosures related to a company's accounting policies for valuing inventory, the type of audit evidence used is Inspection of Documents. This involves examining the company's financial records and supporting documents to verify the accuracy of the information presented in the footnotes.
The primary balance-related audit objective satisfied by this procedure is Valuation. This objective concerns whether the inventory is valued in accordance with relevant accounting standards and principles. By inspecting the footnote disclosures, auditors aim to ensure that the valuation method disclosed by the company correctly reflects the method used and that inventory is appropriately valued on the balance sheet.
Thus, the correct answer to the student's question is: a) Type of Audit Evidence: Inspection of Documents; Balance-Related Audit Objectives: Valuation.