The existence assertion is audited by:
A) tracing transactions from the payroll master file to the payroll register.
B) tracing transactions from the payroll register to the source documents.
C) tracing transactions from the bank statement to the general ledger.
D) Answers A & B only.

Question

Quizplus · Accepted Answer

The existence assertion, which deals with whether the assets and liabilities of the company exist, can be audited by tracing transactions from the payroll master file to the payroll register to ensure that all employees listed in the master file are included in the register (choice A). Similarly, tracing transactions from the payroll register to the source documents, such as time cards or employee contracts, can confirm the legitimacy of the transactions (choice B). Therefore, the best choice is D, which includes both options A and B. Tracing transactions from the bank statement to the general ledger (choice C) would be more relevant to the completeness assertion.

The Existence Assertion Is Audited By