In Which of the Following Circumstances Would the Use of the Negative

question 87

Multiple Choice

In which of the following circumstances would the use of the negative form of accounts receivable confirmation most likely be justified?

• A)A substantial number of accounts may be in dispute and the accounts receivable balance arises from sales to a few major customers.
• B)A substantial number of accounts may be in dispute and the accounts receivable balance arises from sales to many customers with small balances.
• C)A small number of accounts may be in dispute and the accounts receivable balance arises from sales to a few major customers.
• D)A small number of accounts may be in dispute and the accounts receivable balance arises from sales to many customers with small balances.

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Definitions:

Capital Rationing

The process of selecting profitable projects to invest in, limited by the availability of funds.

NPV

Net Present Value, a financial metric used to evaluate the profitability of an investment, considering the time value of money.

Mutually Exclusive

Events or decisions that cannot occur or be taken simultaneously; selecting one option precludes the choice of the other.

Profitability Index

A financial metric used to evaluate the desirability of an investment or project, calculated as the present value of future cash flows divided by the initial investment cost.