The Auditor of the Revenue Cycle of ABC Company Computes

question 106

Multiple Choice

The auditor of the revenue cycle of ABC Company computes an estimate of ABC's allowance for doubtful accounts and compares it to the estimate provided by ABC's management.The purpose for this procedure is to substantiate which assertion?

• A)Existence of receivables.
• B)Cutoff of receivables.
• C)Valuation of receivables.
• D)Rights to receivables.

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Definitions:

Net Margin

A profitability metric calculated as net income divided by revenue, expressing the percentage of revenue that remains as profit after all expenses are deducted.

ISO 9000

A set of international standards on quality management and quality assurance developed to help companies effectively document the quality system elements required for maintaining an efficient quality system.

International Marketplace

The global economic environment in which businesses operate, allowing for the exchange of goods and services across national borders.

Quality Objectives

Goals that relate to the consistency and excellence of a product or service, usually defined in a company's quality management system.