The sole shareholder of Jade Company had a contractor pave the parking lot at the company building as well as the driveway of his home.Both paving jobs were billed to the company on a single invoice.The general balance-related audit objective affected by this activity is
A)existence.
B)allocation.
C)completeness.
D)rights and obligations.

Question

Quizplus · Accepted Answer

The general balance-related audit objective affected by this activity is rights and obligations. This is because the invoice for the paving of the shareholder's home driveway should not have been paid for by the company as it is not an expense related to the company's operations. Therefore, the auditor needs to ensure that the company did not have any unauthorized or invalid expenses, and that all expenses incurred by the company were for its own benefit and in compliance with legal and contractual obligations.

The Sole Shareholder of Jade Company Had a Contractor Pave