The Auditor's Primary Concern in Performing Audit Procedures of the Write-Off

question 21

Multiple Choice

The auditor's primary concern in performing audit procedures of the write-off of uncollectible accounts relates to the risk that the client writes off customer accounts that have already been collected. The primary control for preventing this fraud is

• A) examining authorized credit memos.
• B) examining the uncollectible account authorization form.
• C) examining debit memos.
• D) examining the vouchers payable register.

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Definitions:

Operating Expenses

Costs associated with the day-to-day operations of a business, excluding the cost of goods sold.

Tax Rate

The percentage at which an individual or corporation is taxed, varying according to the amount of income or profit made.

Unrealized Gain

Represents the increase in value of an investment or asset that has not yet been sold for cash.

Commercial Substance

A concept in accounting that a transaction has commercial substance if it significantly changes the economic circumstances of the entities involved.