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.

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Definitions:

Legally Independent

A condition where an organization or individual functions autonomously, having distinct legal rights and obligations, without being controlled by or accountable to another entity.

Separately Elected

The process or state of being chosen or elected independently from others or through a separate procedure.

Proprietary Fund Types

Types of funds in governmental accounting used to account for activities similar to those found in the private sector, where the determination of net income is necessary or useful.

Statement of Cash Flows

A financial report that details the inflows and outflows of cash within a company over a specific period.