Assertions for Inventory

Question 1

Assertions about Classes of Transactions and Events - Occurrence

Answer 1

Inventory transactions and events are valid.

Question 2

Assertions about Classes of Transactions and Events - Completeness

Answer 2

All inventory transactions and events have been properly recorded

Question 3

Assertions about Classes of Transactions and Events - Authorization

Answer 3

All inventory transactions and events are properly authorized

Question 4

Assertions about Classes of Transactions and Events - Accuracy

Answer 4

Inventory transactions have been properly computed and recorded

Question 5

Assertions about Classes of Transactions and Events - Cutoff

Answer 5

Inventory receipts and shipments are recorded in the correct accounting period

Question 6

Assertions about Classes of Transactions and Events - Classification

Answer 6

Inventory is recorded in the proper accounts (e.g., raw materials, work in process, or finished goods)

Question 7

Assertions about Account Balances at the Period End - Existence

Answer 7

Inventory recorded on the books and records actually exists

Question 8

Assertions about Account Balances at the Period End - Rights and obligations

Answer 8

The entity has the legal right (i.e., ownership) to the recorded inventory

Question 9

Assertions about Account Balances at the Period End - Completeness

Answer 9

All inventory is recorded

Question 10

Assertions about Account Balances at the Period End - Valuation and allocation

Answer 10

Inventory is properly recorded in accordance with GAAP (e.g., lower of cost or market)

Question 11

Assertions about Presentation and Disclosure - Occurrence and rights and obligations

Answer 11

All disclosed events, transactions, and other matters relating to inventory have occurred and pertain to the entity

Question 12

Assertions about Presentation and Disclosure - Completeness

Answer 12

All disclosures relating to inventory that should have been included in the financial statements have been included

Question 13

Assertions about Presentation and Disclosure - Classification and understandability

Answer 13

Financial information relating to inventory is appropriately presented and described, and disclosures are clearly expressed

Question 14

Assertions about Presentation and Disclosure - Accuracy and valuation

Answer 14

Financial and other information relating to inventory are disclosed fairly and in appropriate amounts