The following questions deal with confirmation of accounts receivable. Choose the best response.
a. The return of a positive confirmation of accounts receivable without an exception
attests to the
(1) collectibility of the receivable balance.
(2) accuracy of the allowance for uncollectible accounts.
(3) accuracy of the aging of accounts receivable.
(4) accuracy of the receivable balance.
b. Which of the following procedures will an auditor most likely perform for year-end
accounts receivable confirmations when the auditor did not receive replies to second
requests?
(1) Review the cash receipts journal for the month prior to year end.
(2) Intensify the study of internal control concerning the revenue cycle.
(3) Inspect the shipping records documenting the merchandise sold to the debtors.
(4) Increase the assessed level of detection risk for the existence assertion.
c. The negative form of accounts receivable confirmation request is useful except when
(1) internal control surrounding accounts receivable is considered to be effective.
(2) a large number of small balances is involved.
(3) the auditor has reason to believe the persons receiving the requests are likely to
give them consideration.
(4) individual account balances are relatively large
