The Audit Working Papers Often Include a Client-Prepared,aged Trial Balance

question 54

Multiple Choice

The audit working papers often include a client-prepared,aged trial balance of accounts receivable as of the balance sheet date.This aging is best used by the auditors to:

• A)Consider internal control over credit sales.
• B)Test the accuracy of recorded charge sales.
• C)Estimate credit losses.
• D)Verify the validity of the recorded receivables.

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Definitions:

Pro Forma Financial Statements

Financial statements projecting future years’ operations.

Incremental Cash Flows

The additional cash flow an investment brings over the base case or doing nothing.

Canadian Tax Law

The legal framework governing taxation in Canada, including regulations on income tax, sales tax, and other forms of taxes.

Operating Cash Flows

Cash generated from the core business operations, excluding financing and investing activities, important for assessing a company's liquidity.