What Is the Advantage of Using the Negative Form of Confirmations

question 68

Multiple Choice

What is the advantage of using the negative form of confirmations?

• A) Customer's silence proves that the balance is correct.
• B) Larger sample sizes can be used without increasing the costs above what would have been required for positive confirmations.
• C) It is appropriate in all circumstances.
• D) Follow-up procedures are scheduled automatically.

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Definitions:

Operating Activities

Business actions directly related to the production and delivery of goods and services, affecting cash flows from operations.

Indirect Method

A cash flow statement preparation approach that adjusts net income for changes in non-cash accounts to calculate cash flow from operating activities.

Cash Flows

The overall volume of cash inflows and outflows within a corporation, impacting its availability of liquid funds.

Free Cash Flow

A financial metric that measures the amount of cash generated by a company after accounting for capital expenditures.