Which One of the Following Circumstances Would Indicate That Negative

question 65

Multiple Choice

Which one of the following circumstances would indicate that negative confirmations should NOT be used on this engagement?

• A) A significant portion of the total accounts receivable is represented by a small number of accounts with large balances.
• B) The internal control over receivables is good.
• C) The recipients are mostly businesses rather than individuals.
• D) The auditor is unaware of disputed or inaccurate accounts.

---

Definitions:

Observation

A method of data collection involving closely monitoring and recording behaviors, actions, or events as they occur naturally, without interference.

Theory Development

The process of constructing a coherent set of propositions or hypotheses to explain phenomena, often tested through scientific research.

Hypothesis Testing

A statistical method that is used in making statistical decisions using experimental data.

Specific Hypotheses

Precise, testable predictions derived from a broader theory that specify the expected relationship between variables.