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You Are Auditing the Allowance for Doubtful Accounts (ADA)and Perform

question 87

Essay

You are auditing the allowance for doubtful accounts (ADA)and perform the analytical procedures shown below.Assume that no significant changes have occurred during the year in either the client's credit policies or customer base.What concerns,if any,about adjusting the ADA should the auditor have based on the information shown below?


Definitions:

Capital Per Worker

The amount of capital (tools, machinery, and equipment) available per employee, affecting the productivity and efficiency of labor.

Output Per Worker

A measure of labor productivity calculated by dividing total output by the number of workers.

GNP

Gross National Product, which is the total value of all goods and services produced by the residents of a country within a specific time period.

GDP

Gross Domestic Product, a measure of the total economic output of a country, representing the total value of all goods and services produced over a specific time period.

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