Question

Which analytical procedure, in your opinion, is the most important when testing for realizable value of accounts receivable? Why do you think so?

Answer 1

CONFIRMATIONS is the most important analytical procedure in testing the realizable value of accounts receivable.

Accounts receivable are the amounts owed to a business by its customers and are comprised of a potentially large number of invoices amounts. It constitutes the primary source of incoming cash flow for most businesses.

Through confirmations tests of accounts receivable , correctness of total amounts receivable from customers is determined. Tests of realizable value of receivables is to estimate the amount of accounts receivable balance that will not be collected