Which of the Following Is a Substantive Test of the Trade

question 9

Multiple Choice

Which of the following is a substantive test of the trade receivables balance that is always performed?

• A)Evaluating the adequacy of the provision for doubtful debts
• B)Testing the accounting classification of sales transactions
• C)Testing the mathematical accuracy of the cash receipts ledger
• D)None of the above

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Definitions:

Duty of Indemnification

The obligation to compensate for harm or loss incurred by another party, typically outlined in a contract.

State Law

The body of law issued and enforced by a state government, distinct from federal or municipal law.

Fiduciary

A person who has a duty to act primarily for another person’s benefit.

Duty of Performance

An agent’s obligation to perform the duties specified in the agency agreement and to do so with reasonable skill and care.