Analytical Procedures Performed During an Audit Indicate That Accounts Receivable

question 259

Multiple Choice

Analytical procedures performed during an audit indicate that accounts receivable doubled since the end of the prior year. However, the allowance for doubtful accounts as a percentage of accounts receivable remained about the same. Which of the following client Explanation: s would satisfy the auditor?

• A) A greater percentage of accounts receivable are listed in the "more than 120 days overdue" category than in the prior year.
• B) Internal control activities over the recording of cash receipts have been improved since the end of the prior year.
• C) The client opened a second retail outlet during the current year and its credit sales approximately equaled the older outlet.
• D) The client tightened its credit policy during the current year and sold considerably less merchandise to customers with poor credit ratings.

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Definitions:

Qualifications

The qualifications, abilities, and academic background that enable a person to be fit for a specific role or function.

Experience

The knowledge or skill that one gains over time through involvement in or exposure to activities.

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A formal letter submitted to apply for a particular job or position, outlining the applicant's qualifications and interest in the opportunity.

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