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.

Calculate the cash position given financial information.

Analyze the financial impact of sales growth on fixed assets and required additions.

Understand the concept of sustainable growth and the requirement for external financing under different growth scenarios.

Calculate external financing needs based on sales growth, capacity utilization, and dividend payout ratios.

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Definitions:

Holder In Due Course

A legal term for a person who has acquired a negotiable instrument in good faith and for value, and thus has certain protections against defenses and claims that could be asserted against the original payee.

Requirements

Conditions or capabilities needed to achieve a specific task or to adhere to standards or regulations.

Party

An individual or group involved in a legal proceeding or social event.

Instrument For Value

A legal document that represents or embodies a certain value and can be exchanged or used in financial transactions, such as checks, bonds, or certificates of deposit.