Question

Question:

what is the difference between rights of assertion and observation assertion.

Include which financial statements are they related to and what accounts are relevant to each.

Answer 1

Right of assertions

It includes all the assertions regarding all the assets and liabilities.

Observation assertion

It involves in area where auditor or management get conclusions by observation or physical verification.

So rights of assertions include the observations assertion.

These assertions are related to all financial statements such as balance sheet, statement of profit and loss, cash flow statement and for some entity inventory statement as on year end date also includes in financial statements.

The accounts related to the each assertion is as follows :-

Rights of assertions :-

1. All assets in the balance sheet.

2. All liabilities in the balance sheet.

3. Some accounts which require external confirmation like debtor balance and creditor balances and any balance of deposits and loans given to others.

These are all the required information to solve the given question.

I hope, all the above mentioned information and explanations are useful and helpful to you.

Thank you.