If the Auditor Obtains Sufficient Competent Evidence on the Client's

question 65

Multiple Choice

If the auditor obtains sufficient competent evidence on the client's accounts receivable balance by alternative procedures because it is impractical to confirm accounts receivable,the auditor's opinion should be unqualified and could be expected to

• A)disclose the fact that alternative procedures were used due to client-imposed scope limitation.
• B)disclose in the opinion paragraph that confirmation of accounts receivable was impracticable.
• C)avoid mentioning the alternative procedures.
• D)include an explanatory paragraph that discloses the performance of alternative procedures.

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Definitions:

Receivable Turnover Ratio

A measure of how efficiently a company collects its accounts receivable, calculated by dividing net credit sales by average accounts receivable.

Inventory Turnover Ratio

A metric that calculates the number of times inventory is sold or consumed in a given time frame, reiterating the effciency of inventory management.

Quick Ratio

Quick ratio, also known as acid-test ratio, is a liquidity metric that indicates a company's ability to cover its short-term liabilities with its most liquid assets, excluding inventory.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year, calculated as current assets divided by current liabilities.