In Auditing Accounts Receivable, the Negative Form of Confirmation Request

question 86

Multiple Choice

In auditing accounts receivable, the negative form of confirmation request most likely would be used when:

• A)recipients are likely to return positive confirmation requests without verifying the accuracy of the information.
• B)the combined assessed level of inherent and control risk relative to accounts receivable is low.
• C)a small number of accounts receivable are involved but a relatively large number of errors are expected.
• D)the auditor performs a dual purpose test that assesses control risk and obtains substantive evidence.

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Definitions:

MSB Curve

A graph showing the marginal social benefit of producing one more unit of a good or service, considering both private and external benefits.

MCA Curve

MCA Curve might be a misinterpretation or uncommon term; possibly it's meant to refer to concepts like Marginal Cost (MC) in economics, which describes the change in total cost that arises when the quantity produced changes by one unit.

Marginal Social Cost

The total cost to society of producing an additional unit of a good or service, including both private costs and any externalities.

Marginal Cost

The cost added by producing one additional unit of a product or service.