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.

Understand how the issuance of common stock impacts financial statements, particularly paid-in capital and retained earnings.

Recognize the importance of paid-in capital as a main source of funding for corporations.

Acknowledge the significant role corporations play in the economy and their financial characteristics.

Comprehend the accounting treatment of par and no-par value stocks, including stated value.

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Definitions:

Generic Closing

A nonspecific conclusion or sign-off used at the end of a communication that does not tailor to the recipient or context specifically.

Adjustment Messages

Communications intended to address and resolve complaints or disputes, aiming for customer satisfaction.

Claim Messages

Communications asserting a right to something, typically within a business context, such as claims for refunds or adjustments.

Legitimate Requests

Inquiries or appeals that are reasonable, justified, and in compliance with established norms or policies.