Audit and Assurance Practice Exam

Which assertion is associated with cash balances and the completeness of cash transactions during a reporting period?

1. Existence

2. Valuation

3. Completeness

4. Accuracy

The correct answer is: Completeness

The assertion associated with cash balances and the completeness of cash transactions during a reporting period is completeness. This assertion asserts that all transactions that should be recorded have indeed been recorded. In the context of cash balances, completeness ensures that all cash receipts and disbursements for the reporting period are reflected in the financial statements, preventing any omission of cash inflows or outflows. In an audit, the auditor's responsibility includes verifying that no cash transactions have been overlooked, which could lead to misstated financial information. Therefore, the completeness assertion directly relates to ensuring that every relevant cash transaction has been accounted for during the reporting period, reinforcing the integrity and reliability of the financial statements presented to stakeholders. Other assertions such as existence focus on whether assets actually exist at a given date, valuation relates to whether assets and liabilities are recorded at appropriate amounts, and accuracy concerns the proper recording of transactions in the correct amounts and classifications. While these are important in their own right, they do not specifically address the completeness of cash transactions as the completeness assertion does.