The Composition of Oak and Company's Accounts Receivable Are as Follows

question 96

Multiple Choice

The composition of Oak and Company's accounts receivable are as follows: Over $250,000 - 5 accounts
Between $25,000 and $250,000 - 80 accounts
Less than $25,000 - 200 accounts
The best confirmation strategy for the auditor is:

• A)Positive confirmations on a sample of all 285 accounts.
• B)Positive confirmations on all a sample of all accounts over $25,000; negative confirmations on a sample of accounts less than $25,000.
• C)Positive confirmations on all 5 accounts over $250,000; positive confirmations on a sample of the accounts between $25,000 and $25,000; negative confirmations on a sample of accounts less than $25,000.
• D)Positive confirmations on all 5 accounts over $250,000; negative confirmations on a sample of the accounts less than $250,000.

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Definitions:

Accrued Expenses

Expenses that have been incurred but not yet paid or recorded in the accounts, representing liabilities for goods or services received.

Incurred

Describes expenses or liabilities that have been realized or consumed in the course of business operations.

Recorded

The process of making an official or formal documentation of a particular data or event in accounting or records.

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditures to the appropriate period.