An Auditor Is Concerned That Accounts Receivable May Be Understated

question 62

Essay

An auditor is concerned that accounts receivable may be understated resulting from sales to customers that have been omitted from both the sales journal and the accounts receivable master file. Describe the procedure(s) the auditor should perform in these circumstances.

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Definitions:

Rank Coefficient

A statistical measure that evaluates the strength and direction of a relationship between two ranked variables.

Spearman Rank-Correlation

A nonparametric measure of correlation that assesses how well the relationship between two variables can be described using a monotonic function, based on ranked values.

Linear Way

Refers to a direct and straightforward approach or method that progresses continuously from one point to the next.

Spearman Correlation

A non-parametric measure of rank correlation that assesses how well the relationship between two variables can be described using a monotonic function.