An Auditor Reconciles the Total of the Accounts Receivable Subsidiary

question 51

Multiple Choice

An auditor reconciles the total of the accounts receivable subsidiary ledger to the general ledger control account, as at 30 June 2015.By this procedure, the auditor would be most likely to learn of which of the following?

• A)An April cheque from a customer was posted in error to the account of another customer with a similar name.
• B)An April invoice was improperly computed.
• C)An account balance is past due and should be written off.
• D)An opening balance in a subsidiary ledger account was improperly carried forward from the previous accounting period.

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Definitions:

Horizontal Equity

The principle that individuals with the same income or resources should be treated equally by the tax system.

Tax Deductions

Expenses that can be subtracted from gross income to reduce the amount of income that is subject to income tax.

Double Taxation

A taxation principle where income taxes are paid twice on the same source of earned income, property, or financial asset.

Saving Rate

The proportion of disposable income that is saved rather than spent by households.