Physical examination
A) is a direct means of verifying that an asset really exists.
B) is sufficient evidence to verify that the existing assets are owned by the client.
C) can be used for both tangible assets and documents.
D) is not generally a reliable type of audit evidence.

Question

Quizplus · Accepted Answer

Physical examination is a direct means of verifying that an asset really exists. It allows the auditor to physically inspect and verify the existence and condition of tangible assets.

Answer: C 
 Physical examination can be used for both tangible assets and documents. For instance, the auditor can physically inspect documents such as contracts, invoices, and receipts to verify their authenticity and accuracy.

Answer: D 
 Physical examination alone is not generally a reliable type of audit evidence. This is because it only provides evidence about the existence and condition of the assets at the time of examination. It does not provide evidence about ownership, valuation, or completeness of the assets. Consequently, physical examination is often used in combination with other types of audit evidence, such as confirmation and inquiry, to obtain sufficient and reliable audit evidence.

Therefore, the best choices are A and C.

Physical Examination