ACCA Audit and Assurance (F8) Practice Exam

Which of the following is NOT an assertion related to account receivables?

1. Existence

2. Rights and Obligations

3. Comprehensiveness

4. Valuation and Allocation

The correct answer is: Comprehensiveness

In the context of audit assertions related to accounts receivable, the primary focus is on the veracity and reliability of the financial reporting associated with those receivables. Assertions are categorized into three main areas: existence, rights and obligations, and valuation and allocation. The assertion of existence confirms that accounts receivable balances recorded in the financial statements actually exist as of the reporting date. This is crucial since it ensures that reported assets are not overstated. The rights and obligations assertion relates to the entity's rights to receive the reported amounts and its obligations related to those receivables. This ensures that the company owns the receivables it has recognized in its financial statements. Valuation and allocation involve ensuring that accounts receivable are recorded at their correct value, considering any necessary adjustments for uncollectible accounts (bad debts) or discounts. Comprehensiveness, however, is not a recognized assertion specific to accounts receivable. Instead, this term might be more relevant in discussing the completeness of financial statements as a whole or ensuring all transactions are fully represented. In the context of assertions linked directly to account receivables, it does not fit within the established categories of assertions, which is why it is the correct choice in this question.