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In Evaluating the Adequacy of the Allowance for Doubtful Accounts

question 961

Multiple Choice

In evaluating the adequacy of the allowance for doubtful accounts, an auditor most likely reviews the entity's aging of receivables to support management's financial statement assertion of:


Definitions:

Cost Method

An accounting approach whereby investments are recorded at their original purchase cost, without adjusting for changes in fair value, except for impairments.

Investment

The allocation of resources, such as capital or time, in the expectation of generating an income or profit.

CICA Handbook

The Canadian Institute of Chartered Accountants Handbook, which contains accounting and assurance standards in Canada.

Capitalize

To record a cost as a long-term asset rather than an expense, spreading the cost over its useful life.

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