Question

The audit procedure of tracing a purchased asset to its source documentation provides assurance on which assertions?

a. Presentation and disclosure.
b. Completeness.
c. Valuation and rights and obligations.
d. Existence.

Answer 1

Tracing a purchased asset to its source documentation gives assurance on the 'existence' assertion, confirming the asset is real and belongs to the entity. The correct answer is option d.

Step-by-step explanation:

The audit procedure of tracing a purchased asset to its source documentation primarily provides assurance on the existence assertion. This procedure involves verifying that the asset not only exists but also that the entity has rights to it by inspecting the relevant and supporting documentation, such as purchase orders, invoices, and title documents. This helps confirm that the asset was indeed purchased and is controlled by the entity. While this procedure might incidentally give some insight into the valuation and rights and obligations and completeness, its direct intention is to confirm existence.