Which of the Following Circumstances Would Indicate That Positive Confirmations

question 82

Multiple Choice

Which of the following circumstances would indicate that positive confirmations should be used on this engagement?

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

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Definitions:

Preliminary Prospectus

An initial document given to investors that outlines important details of a potential investment, including risks, objectives, and terms.

Red Herring

A preliminary prospectus provided to potential investors in a new issue of securities, containing information but not the final price.

Registration Statement

A legal document filed with the SEC that contains information about a company's financial operations, used for new securities issuance.

Interest Rates

The expense incurred when obtaining a loan, typically represented as a percent of the total amount lent.