Most Tests of Accounts Receivable and the Allowance for Uncollectible

question 64

Multiple Choice

Most tests of accounts receivable and the allowance for uncollectible accounts are based on the:

• A) results of analytical procedures.
• B) results of confirmations.
• C) aged trial balance.
• D) general ledger balance of each account.

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Definitions:

Company's Profits

The financial gain realized when the revenues generated from business activities exceed the expenses, costs, and taxes needed to sustain the activities.

Interest

The cost of borrowing money or the return earned on an investment, typically expressed as a percentage.

Accounting Period

A specific time period at the end of which an organization prepares financial statements.

Income Statement

A financial statement that shows a company’s revenues and expenses over a specific period, illustrating how the revenues are transformed into net income or loss.