In Order to Obtain Evidence Regarding Valuation of Accounts Receivable

question 64

Multiple Choice

In order to obtain evidence regarding valuation of accounts receivable, the auditor is likely to:

• A) send out confirmations to the client's debtors requesting amount owed verification.
• B) inquire of management as to the accuracy of sales transactions.
• C) examine completed confirmation requests for discrepancies between debtor and client amount.
• D) All of the above.

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Definitions:

Sampling Distribution

The distribution of a statistic (such as the mean or variance) derived from a large number of samples of a specific size from a particular population.

Sample Proportion

The ratio of members in a sample exhibiting a particular attribute to the total sample size, often expressed as a percentage.

Standard Deviation

An indicator of the degree of spread or divergence from the average in a collection of data, showing the extent to which the data points vary from their average value.

Sample Mean

The average value of the observations in a sample, used as an estimate of the population mean, calculated by summing all observations and dividing by the number of observations.