Multiple Choice
Which of the following elements are included in the definition of a product as it appears on the financial statements?
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1. Introduction to Accounting
The Financial Statements
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Which of the following is NOT one of the assertions made by management about an account balance?
A
Valuation and allocation
B
Rights and obligations
C
Occurrence
D
Completeness
Verified step by step guidance1
Understand the concept of management assertions: Management assertions are representations made by management regarding the accuracy and completeness of financial statements. These assertions are used by auditors to assess the reliability of the financial information.
Review the common types of management assertions related to account balances: These typically include Valuation and Allocation (ensuring assets and liabilities are recorded at appropriate amounts), Rights and Obligations (ensuring the entity has ownership or control over the assets and liabilities), and Completeness (ensuring all transactions and balances are recorded).
Analyze the term 'Occurrence': Occurrence is an assertion related to transactions and events, not account balances. It ensures that recorded transactions actually took place during the reporting period. This assertion is not applicable to account balances.
Compare the provided options: Valuation and Allocation, Rights and Obligations, and Completeness are all valid assertions related to account balances. Occurrence, however, is not related to account balances but rather to transactions and events.
Conclude that the correct answer is 'Occurrence' because it does not pertain to account balances, unlike the other options provided.
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