In fixed asset testing, which tracing direction is used to verify existence and completeness?

In fixed asset testing, which tracing direction is used to verify existence and completeness?

• A. From register to physical asset for existence, and from physical asset to register for completeness
• B. From cash book to supplier invoices
• C. From depreciation schedule to cost
• D. From tax returns to asset register

Answer: (A)

In fixed asset testing, you use tracing to connect the accounting records with the actual assets to check two key assertions: existence and completeness. To verify existence, you start with the asset register (the accounting record) and trace entries to the physical assets themselves. If you can locate the physical asset that corresponds to an entry in the register, that supports that the asset exists as recorded. To verify completeness, you start with the physical assets and trace them back to the asset register. This ensures every asset you see in reality is included in the records and nothing is missing. So the direction that checks existence is tracing from the asset register to the physical asset, and the direction that checks completeness is tracing from the physical asset back to the asset register. This aligns with the idea that you confirm recorded assets exist, and you ensure all actual assets are captured in the records. The other options relate to different areas (like cash/bookkeeping documentation, depreciation linkage, or tax-derived data) and do not address the specific fixed-asset existence and completeness tracing.

In fixed asset testing, you use tracing to connect the accounting records with the actual assets to check two key assertions: existence and completeness. To verify existence, you start with the asset register (the accounting record) and trace entries to the physical assets themselves. If you can locate the physical asset that corresponds to an entry in the register, that supports that the asset exists as recorded. To verify completeness, you start with the physical assets and trace them back to the asset register. This ensures every asset you see in reality is included in the records and nothing is missing.

So the direction that checks existence is tracing from the asset register to the physical asset, and the direction that checks completeness is tracing from the physical asset back to the asset register. This aligns with the idea that you confirm recorded assets exist, and you ensure all actual assets are captured in the records.

The other options relate to different areas (like cash/bookkeeping documentation, depreciation linkage, or tax-derived data) and do not address the specific fixed-asset existence and completeness tracing.