When the Positive Form of Accounts Receivable Confirmation Is Used

question 13

Multiple Choice

When the positive form of accounts receivable confirmation is used and no response is received, the auditor should normally:

• A) assume the account is in error.
• B) assume the account is correct.
• C) send a second request.
• D) send a negative confirmation.
• E) contact the customer by telephone.

---

Definitions:

Ordinary Income

Income earned from providing services, including wages, salaries, tips, and commissions, as well as income from investments that are not considered capital gains.

Nondeductible Items

Expenses or items that cannot be subtracted from gross income to reduce taxable income according to tax laws.

Partnership Interest

An ownership share in a partnership that entitles the holder to a portion of the entity's profits and losses.

FMV

Fair Market Value, the price at which property would sell on the open market between a willing buyer and a willing seller.