An Audit of Customer Accounts Receivable Found That Outstanding Receivables

question 247

Multiple Choice

An audit of customer accounts receivable found that outstanding receivables as a percentage of revenue had increased significantly during the past two years. The increase was attributed to the extension of credit, at the urging of the marketing department, to a number of companies that were not credit worthy. Which of the following would be least useful in monitoring the disposition of this finding?

• A) Responses from the manager of accounts receivable regarding collection of outstanding receivables.
• B) Periodic updates from the controller regarding the status of corrective actions.
• C) Information from the credit and marketing personnel assigned the responsibility for reevaluating credit policies.
• D) Updates from the information technology division regarding implementation of a new accounts receivable system.

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Definitions:

Gasoline

A volatile, flammable liquid derived from petroleum, used primarily as fuel in internal combustion engines.

Gas Pump

A gas pump is a machine at a filling station that is used to transfer gasoline from a reservoir to a vehicle's fuel tank.

Reservation Price

The maximum or minimum price at which a consumer is willing to buy or sell a good or service.

Utility Function

A representation in economics that maps a set of goods and services into a numerical level of utility (satisfaction or happiness) that a consumer derives from those goods and services.