Question

By selecting a sample of additions to property, plant, and equipment and then examining the related vendor invoices, the auditor is testing which of the following assertions for property, plant, and equipment?

A. Classification.
B. Completeness.
C. Occurrence.
D. Cutoff.

Answer 1

When the auditor selects a sample of additions to property, plant, and equipment and examines the related vendor invoices, they are testing the assertion of occurrence for property, plant, and equipment. The auditor is verifying whether the recorded additions actually occurred and are valid transactions.

Step-by-step explanation:

When the auditor selects a sample of additions to property, plant, and equipment and examines the related vendor invoices, they are testing the assertion of occurrence for property, plant, and equipment. This means that the auditor is verifying whether the recorded additions actually occurred and are valid transactions.

The auditor will review the vendor invoices to confirm that the additions were properly authorized, supported by valid documentation, and recorded accurately. These steps help ensure that the assets were actually acquired and added to the company's property, plant, and equipment.

For example, the auditor may select a sample of equipment additions and examine the vendor invoices to verify that the purchases were properly authorized by management and supported by contracts or purchase orders.