It Is the Auditor's Job to Review the Client's Estimate

question 100

Multiple Choice

It is the auditor's job to review the client's estimate to evaluate whether it has been determined in accordance with the applicable financial reporting framework.To do this,the auditor considers whether the allowance for doubtful accounts is properly valued based on

• A)the accounts written off during the prior year
• B)the accounts receivable balance at the end of the prior year
• C)prior economic conditions
• D)the economic status of current customers
• E)the net receivable balance that should represent the amount of cash the company expects to collect in the following year
• F)both A and C
• G)both B and D
• H)Both D and E

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Definitions:

Productive

Refers to the effectiveness in producing a significant amount of output per unit of input.

Industries

Sectors of an economy that produce goods or provide services.

Mortgage-backed Securities

Financial instruments that represent claims on the cash flows from pools of mortgage loans, primarily on residential property.

Wall Street

A street in New York City known as the financial district of the United States, symbolizing the American financial markets.