A major consideration in verifying the ending balance in fixed assets is the possibility of existing legal encumbrances. Tests to identify possible legal encumbrances would satisfy the audit objective of
A) existence.
B) presentation and disclosure.
C) detail tie-in.
D) classification.

Question

Quizplus · Accepted Answer

Legal encumbrances relate to presentation and disclosure of fixed assets, as they affect the ability of the organization to dispose of those assets. Therefore, tests to identify possible legal encumbrances would satisfy the audit objective of presentation and disclosure.

A Major Consideration in Verifying the Ending Balance in Fixed