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So the MCQ I’m talking about goes like this:
An auditor tests an entity’s policy of obtaining credit approval before shipping goods to customers in support of management’s financial statement assertion of:
A. valuation and allocation.
B. completeness.
C. existence.
D. rights and obligations.
So the answer is A. I picked D because I thought it was the entity’s credit instead of the customer’s. The question makes it sound like the business is checking their own credit. From what I understand, valuation is about what belongs to someone else and rights/obligations is about what the business has. Was anyone else confused by the wording?
FAR 57 (11/2014), 64 (1/2015), 79 (7/2015)
AUD 68 (2/2015), 79 (11/2015)
REG 79 (1/2016)
BEC 81 (4/2016)
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