Negative Confirmations of Accounts Receivable Are Less Effective Than Positive

question 38

Multiple Choice

Negative confirmations of accounts receivable are less effective than positive confirmations because when using negative confirmations:

• A) the auditor cannot infer that all nonrespondents have verified their account information.
• B) they do not produce evidential matter that is statistically quantifiable.
• C) some recipients may report incorrect balances that require extensive follow-up.
• D) a majority of recipients usually lacks the willingness to respond objectively.

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Definitions:

Price of Chicken

The cost at which chicken is sold, which can vary based on factors like market demand, feed prices, and production costs.

Demand for Beef

The desire of consumers to purchase beef at various price levels, holding other factors constant.

Prices of Inputs

The costs associated with the materials, labor, and other resources necessary for the production of goods or services.

Produce

To manufacture, grow, or create goods and services for consumption or sale.