After the CPAs Have Selected Particular Accounts Receivable for Confirmation

question 53

Multiple Choice

After the CPAs have selected particular accounts receivable for confirmation:

• A) As a control measure, the CPAs should carefully list the audited values of all of those accounts before turning the letters over to the client to type and mail.
• B) It is important that every account selected that has a material balance ultimately be verified by confirmation or the application of alternative procedures; immaterial balances never require any follow-up through alternative procedures.
• C) All requests for confirmation should be mailed in envelopes bearing the CPA firm's return address and should include a return envelope addressed to the CPA firm.
• D) All differences between confirmation replies and book values should be reconciled by the CPAs, rather than the client.

---

Definitions:

Interest Income

Earnings received from investments in debt instruments such as bonds, loans, or savings accounts.

Carrying Amount

The value at which an asset or liability is recognized on the balance sheet, factoring in depreciation or amortization and impairment if applicable.

Market Rate Of Interest

The prevailing rate at which interest is paid by borrowers for loans in the financial markets.

Trading Investments

Securities that a company purchases with the intention of selling in the short term for a profit.