An Auditor Should Perform Alternative Procedures to Substantiate the Existence

question 27

Multiple Choice

An auditor should perform alternative procedures to substantiate the existence of accounts receivable when:

• A)No reply to a positive confirmation request is received.
• B)No reply to a negative confirmation request is received.
• C)Collectibility of the receivables is in doubt.
• D)Pledging of the receivables is probable.

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Definitions:

Delivery Cycle Time

The total time taken from the receipt of a customer order to the delivery of the product, indicating the efficiency of the entire supply chain process.

Residual Income

The income that remains after deducting all costs, including opportunity costs, from business operations or investments.

Consumer Products Division

A segment of a company that focuses on producing and selling goods directly to consumers rather than businesses or other organizations.

Manufacturing Cycle Efficiency

A measurement of the effectiveness of the manufacturing process, calculated by dividing the value-added time by the total cycle time.