An Auditor Should Perform Alternative Procedures to Substantiate the Existence

question 15

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:

Hormel

An American company known for its food products, particularly meats.

Trade Discount

A reduction in the listed price of a product or service offered by a seller to a buyer in the same trade.

Suggested Retail Price

The price that manufacturers recommend retailers to sell their products for to consumers, often seen as MSRP (Manufacturer's Suggested Retail Price).

Cash Discounts

A reduction in the price of goods or services offered to buyers as an incentive for early payment or payment in cash.