The Public Has Turned to CPAs to Provide Assurance Services

question 69

Multiple Choice

The public has turned to CPAs to provide assurance services primarily because

• A) The independence and objectivity of CPAs increase the public trust.
• B) There is a need to develop new revenue streams for accounting firms.
• C) Audits do not provide reliable information for decision makers.
• D) CPAs have been proactive in identifying new types of assurance services to market to customers.

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Definitions:

Aging of Accounts

A method used to estimate uncollectable debts by categorizing accounts receivables based on how long they have been outstanding.

Uncollectible Percentage

Estimate of the portion of accounts receivable that will not be collected, used in calculating bad debt expense.

Bad Debt Expense

An expense reported on the income statement, reflecting the cost of accounts receivable that a company does not expect to collect due to customers' inability to pay.

Aging of Accounts

A method used to categorize accounts receivable based on the length of time an invoice has been outstanding, often to identify potential collection issues.