A Client Has a Separate Sales Group for Its Largest

question 71

Multiple Choice

A client has a separate sales group for its largest "preferred" customers. This is a select group of customers that normally make purchases in excess of $250,000 and often have accounts receivable balances in excess of $1 million. Which of the following audit procedures would the auditor most likely perform?

• A)Prepare a schedule of purchases and payments for these customers.
• B)Send out negative confirmations on a large sample of these customers.
• C)Inquire of the sales manager regarding the accounts receivable terms.
• D)Send out positive confirmations on a large sample of these customers.

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Definitions:

Define The Problem

The initial step in the problem-solving process, involving the identification and clear articulation of an issue or obstacle that needs to be addressed.

Five-step Model

Often refers to processes or methodologies broken down into five distinct stages; specific application varies across disciplines, including problem-solving and decision-making frameworks.

Representativeness

The cognitive bias in decision-making where the likelihood of an event is evaluated based on how much it resembles a typical case.

Mental Prototype

A mental image or best example that embodies the most typical characteristics of a particular category or concept.