When an Auditor Does Not Receive Replies to Positive Requests

question 413

Multiple Choice

When an auditor does not receive replies to positive requests for year-end accounts receivable confirmations, the auditor most likely would:

• A) Inspect the allowance account to verify whether the accounts were subsequently written off.
• B) Increase the assessed level of detection risk for the valuation and completeness assertions.
• C) Ask the client to contact the customers to request that the confirmations be returned.
• D) Increase the assessed level of inherent risk for the revenue cycle.

---

Definitions:

Mineral Water

Water that contains various minerals, such as salts and sulfur compounds, often sourced from a well or spring and considered beneficial to health.

Demand Curve

A graphical representation of the relationship between the price of a good and the quantity demanded by consumers at those prices.

Profit-Maximizing Output

The level of production at which a firm achieves the highest possible profit, determined by the point where marginal cost equals marginal revenue.

Antimacassars

Protective coverings designed to be placed on the back or arms of chairs to prevent them from being soiled by hair oil or other substances.