During an audit of an entity's stockholders' equity accounts, the auditor determines whether there are restrictions on retained earnings resulting from loans, agreements, or state law. This audit procedure most likely is intended to verify the ASB presentation and disclosure assertion of:
A)occurrence.
B)completeness.
C)rights and obligations.
D)understandability.

Question

Quizplus · Accepted Answer

The auditors are checking whether there are any restrictions on retained earnings due to loans, agreements, or state law, which is related to the rights and obligations assertion. The auditor is verifying whether the entity has complied with these restrictions and is presenting them appropriately in the financial statements.

During an Audit of an Entity's Stockholders' Equity Accounts, the Auditor