A common inventory observation procedure is to select a random sample of tag numbers and identify the tag with that number attached to the actual inventory item. The audit objective being achieved by this procedure is
A) inventory as recorded on tags actually exists (existence).
B) existing inventory is counted and tagged (completeness).
C) inventory is counted accurately (accuracy).
D) inventory is classified correctly (classification).

Question

Quizplus · Accepted Answer

The audit objective being achieved by this procedure is "inventory as recorded on tags actually exists", which is related to the existence assertion. This procedure allows auditors to test the validity of the existence assertion by matching the tagged inventory to the actual physical inventory.

A Common Inventory Observation Procedure Is to Select a Random