Question

8. Confirmation of accounts receivable addresses which of the assertions about account balance?

A) Occurrence.

B) Existence.

C) Completeness.

D) Cut-off.

9. Which of the following would indicate the need to use positive accounts receivable confirmation requests?

A) A large population consisting of very small balances.

B) Good internal control over the credit sales process and account receivable accounting.

C) Most customers are large reputable companies.

D) Many accounts receivable with large ending balances are in dispute.

10. The audit working papers often include a client-prepared, aged trial balance of accounts receivable as of the balance sheet date. This aging is best used by the auditors to:

A) Consider internal control over credit sales.

B) Performing analytical procedures.

C) Estimate credit losses.

D) Verify the validity of the recorded receivables.

11. An auditor should perform alternative procedures to substantiate the existence of accounts receivable when:

A) No reply to a positive confirmation request is received.

B) No reply to a negative confirmation request is received.

C) Collectibility of the receivables is in doubt.

D) Pledging of the receivables is probable.

Answer 1

Ans 8

B) Existence

Ans 9

D) Many accounts receivable with large ending balances are in dispute.

Ans 10

C) Estimate credit losses.

Ans 11

A) No reply to a positive confirmation request is received.

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