Once an Auditor Has Determined That Accounts Receivable at Year-End

question 13

Multiple Choice

Once an auditor has determined that accounts receivable at year-end have increased due to slow collections in a 'tight money' environment, the auditor would be likely to:

• A)review the going concern ramifications.
• B)increase the balance in the allowance for bad debts account.
• C)expand tests for the valuation and allocation assertion.
• D)expand tests for the existence assertion.

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Definitions:

Environment

The surrounding conditions, influences, or forces which affect the life, behavior, or development of an organism or community.

Innate Tendency

An inherent inclination or natural disposition in organisms to behave in a certain way.

Human Nature

The inherent characteristics, including ways of thinking, feeling, and acting, that all humans share.

Actualization

The process of realizing or achieving one's potential or capabilities, often associated with Maslow's hierarchy of needs.