Negative Confirmations of Accounts Receivable Is Less Effective Than Positive

question 93

Multiple Choice

Negative confirmations of accounts receivable is less effective than positive confirmations of accounts receivable because

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

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Definitions:

Farm Products

Goods that are produced through agriculture, such as crops, livestock, and the products derived from them.

Documents of Title

Legal documents that provide proof of a person's rights to control the disposition of goods or property, such as bills of lading or warehouse receipts.

Identity

Identity refers to the qualities, beliefs, personality, looks, and/or expressions that make a person (self-identity) or group (particular social category or social group) distinct.

Leader

An individual who guides or directs a group, often by inspiring or influencing others toward a common goal.