When an Audit Team Does Not Receive a Response on a Positive

question 40

Multiple Choice

When an audit team does not receive a response on a positive accounts receivable confirmation, auditors should do all of the following except:

• A)send a second request.
• B)do nothing for immaterial balances.
• C)examine shipping documents.
• D)examine client correspondence files.

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Definitions:

Ending Inventory

The worth of products ready for purchase at the conclusion of a financial period.

Cost Flow Assumption

A method adopted by businesses to value inventory and determine the cost of goods sold, such as FIFO (First In, First Out) or LIFO (Last In, First Out).

FIFO

"First In, First Out," an inventory valuation method assuming that the first items purchased are the first ones sold, affecting the cost of goods sold and ending inventory value.

Specific Identification

An accounting method used for inventory costing, where each item in inventory is identified and its cost is individually recorded.