An Auditor's Analysis of Specific Accounts Receivable and Recent Trends

question 4

Multiple Choice

An auditor's analysis of specific accounts receivable and recent trends in bad debt losses as a percent of sales may cause the auditor to conclude that the allowance for doubtful accounts should be between $130,000 and $160,000.If management's recorded estimate falls within that range,the auditor ordinarily would conclude that the recorded amount is reasonable,and no difference would be aggregated.If management's recorded estimate is $110,000,how much would be aggregated as a misstatement?

• A)$0.
• B)$30,000.
• C)$20,000.
• D)$110,000.

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Definitions:

Abandoning

The act of leaving or withdrawing support from someone or something.

Cheating

The act of being dishonest, breaking rules, or deceiving in order to gain an unfair advantage.

Marrying

Marrying is the act of becoming legally united to another person in a ceremony recognized by law or culture, establishing a marital relationship.

Losing

The act of not winning or failing to achieve an objective or goal.