The Most Important Test of Details of Balances to Determine

question 43

Multiple Choice

The most important test of details of balances to determine the existence of recorded accounts receivable is:

• A) the confirmation of customers' balances.
• B) tracing sales returns entries to credit notes issued and receiving room reports.
• C) tracing sales entries to shipping documents.
• D) tracing the credits in accounts receivable to bank deposits.

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Definitions:

Unearned Revenue

Money received by a company for goods or services yet to be provided. It is considered a liability until the service is delivered or the product is provided.

Investments

Assets purchased with the aim of generating income or appreciation, including securities, real estate, and other financial assets.

Wages Payable

A liability account that records the amount of unpaid wages earned by employees at the end of a reporting period.

Debit to Cash

An accounting entry that increases the cash balance in the company's ledger, reflecting an inflow of cash.