A Positive Confirmation Is More Reliable Evidence Than a Negative

question 108

Multiple Choice

A positive confirmation is more reliable evidence than a negative confirmation because

• A) fewer confirmations can be sent out.
• B) the auditor has a document which can be used in court.
• C) the debtor's lack of response indicates agreement with the stated balance.
• D) follow-up procedures are performed if a response is not received from the debtor.

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Definitions:

Interest Expense

Expenses an entity faces for using borrowed money over a specific duration.

Prepaid Interest

Interest that is paid in advance of the period to which it applies, often relating to mortgage or loan agreements.

Worksheet

An informal accounting document used internally to assemble, adjust, and sort various account balances for the preparation of financial statements.

Trial Balance

A bookkeeping report that lists the balances of all ledgers accounts in order to check the mathematical accuracy of the accounts' balances.