Q2. For each of the following, state whether it is a test of details of account balances or a test of details of disclosures. Then note for which assertion the test provides evidence.

1. Inspect loan agreements under which an entity's inventories are pledged.

2. Review inventory compilation for proper classification among raw materials, work in process, and finished goods.

3. Observe the count of physical inventory.

4. Trace test counts and tag control information to the inventory compilation.

5. Inquire of management about issues related to LIFO liquidations.

6. Review book-to-physical adjustments for possible misstatements.

Below is the answer of the first one to explain how to answer the question:

1. Disclosures - Occurrence, Rights and obligations