Negative Confirmation of Accounts Receivable Is Less Effective Than Positive

question 5

Multiple Choice

Negative confirmation of accounts receivable is less effective than positive confirmation of accounts receivable because:

• A)a majority of recipients usually lacks the willingness to respond objectively.
• B)some recipients may report incorrect balances that require extensive follow up.
• C)the auditor cannot infer that all nonrespondents have verified their account information.
• D)negative confirmations do not produce evidential matter that is statistically quantifiable.

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Definitions:

Cyclic Esters

Organic compounds characterized by a ring structure containing an ester linkage, also known by the term "lactones."

Lactones

Cyclic esters formed by the intramolecular reaction of a hydroxy acid, commonly found in various natural products and fragrances.

Cyclohexyl Formate

An organic ester derived from cyclohexanol and formic acid, known for its use in fragrance and flavor compositions.

Trifluoroacetic Anhydride

A chemical reagent used in organic synthesis to introduce trifluoroacetyl groups into molecules.