Which P&L assertion ensures that recorded transactions actually occurred?

Which P&L assertion ensures that recorded transactions actually occurred?

• A. Occurrence
• B. Completeness
• C. Accuracy
• D. Cut-off

Answer: (A)

The key idea is to verify that what’s in the P&L really happened. The occurrence assertion for profit and loss focuses on whether recorded revenues and expenses are based on real events and transactions for the period. Auditors test this by looking for supporting source documents—invoices, receipts, shipping records, and similar evidence—that confirm the entries actually occurred. If the entries lack documentation or cannot be traced to a real transaction, the occurrence claim would be violated. Completeness is about capturing all transactions that occurred, not about whether the recorded ones actually happened. Cut-off checks that transactions are recorded in the correct period. Accuracy checks that amounts are recorded correctly. So the assertion that best fits the idea of recorded items having truly occurred is the occurrence assertion.

The key idea is to verify that what’s in the P&L really happened. The occurrence assertion for profit and loss focuses on whether recorded revenues and expenses are based on real events and transactions for the period. Auditors test this by looking for supporting source documents—invoices, receipts, shipping records, and similar evidence—that confirm the entries actually occurred. If the entries lack documentation or cannot be traced to a real transaction, the occurrence claim would be violated.

Completeness is about capturing all transactions that occurred, not about whether the recorded ones actually happened. Cut-off checks that transactions are recorded in the correct period. Accuracy checks that amounts are recorded correctly. So the assertion that best fits the idea of recorded items having truly occurred is the occurrence assertion.