Smith Is Engaged in the Audit of a Cable TV

question 61

Multiple Choice

Smith is engaged in the audit of a cable TV firm that services a rural community. All receivable balances are small, customers are billed monthly, and internal control is effective. To determine the existence of the accounts receivable balances at the balance sheet date, Smith would most likely:

• A)send positive confirmation requests.
• B)send negative confirmation requests.
• C)examine evidence of subsequent cash receipts instead of sending confirmation requests.
• D)use statistical sampling instead of sending confirmation requests.

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Definitions:

Animism

Tendency to attribute life to objects that are not alive.

Inductive Reasoning

A method of reasoning in which specific observations or experiences are used to make general conclusions.

Decentration

The cognitive ability to consider multiple aspects of a situation rather than focusing on a single standpoint.

Causal Reasoning

The ability to identify and understand the relationship between cause and effect.