The Primary Difference Between Positive and Negative Confirmations Used in the Audit

question 107

Multiple Choice

The primary difference between positive and negative confirmations used in the audit of accounts receivable is

• A)the mode of response.
• B)the amount of information included.
• C)the control of the confirmation process by the auditor.
• D)the valuation of the receivable.

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Definitions:

Lease Term

The fixed, non-cancellable period during which a lessee has the right to use an asset, with the option for renewal under specific conditions.

Operating Lease

A contract allowing for the use of an asset without ownership, generally resulting in periodic lease payments and not recorded on the lessee's balance sheet under certain conditions.

Capital Lease

A lease agreement that is classified as a purchase by the lessee for accounting purposes, based on criteria such as ownership transfer or a bargain purchase option.

Asset Turnover Ratio

A financial ratio that measures the efficiency of a company's use of its assets to generate sales revenue, calculated as total revenue divided by average total assets.