Final answer:
The statement 'Tracing from source documents to the journal is useful for testing the existence objective' is True. (option A)
Step-by-step explanation:
Tracing from source documents to the journal is useful for testing the existing objective. This helps in verifying that recorded transactions occurred and are supported by appropriate documentation.
Tracing from source documents to the journal is an important step in the accounting process. It helps in ensuring that all the transactions and events recorded in the journal have valid source documents to support them. This helps in testing the existence objective of auditing, which focuses on verifying that the recorded transactions occurred and are supported by appropriate documentation. When auditors check the existence objective, they want to verify that assets or transactions recorded in the financial statements have occurred and are supported by documentation.
For example, if a company records a purchase in its journal, tracing back to the source document, such as a purchase invoice, can provide evidence that the transaction occurred and is genuine.