Auditors Are Concerned with the Addresses Provided for Customers in the Confirmation

question 68

Multiple Choice

Auditors are concerned with the addresses provided for customers in the confirmation of accounts receivable because of which of the following reasons?

• A) Confirmations are selected based upon zip codes.
• B) A P.O. Box is more reliable than a street address.
• C) Confirmations should be sent only to business addresses and not residential.
• D) The address may be routed to the client for retrieval and fraudulent signing.

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Definitions:

Commodity

A basic good used in commerce that is interchangeable with other goods of the same type, often traded on futures exchanges.

Futures Contract

A contract to purchase or sell a specified commodity or financial instrument at an agreed-upon price at a future date.

Credit Risk

The risk that the bond will not make all of its promised payments; default risk.

Swap Market

A market in which individuals, businesses, and institutions exchange financial instruments, like interest rates or currencies.