When the Positive Form of Accounts Receivable Confirmation Is Used

question 36

Multiple Choice

When the positive form of accounts receivable confirmation is used and no response is received, the auditor should normally:

• A) assume the account is in error.
• B) send a second positive request.
• C) assume the account is correct.
• D) send a negative confirmation.

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Definitions:

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, often receiving dividends before common shareholders.

Treasury Stock

Shares that were issued and subsequently repurchased by the issuing company, reducing the amount of outstanding stock on the open market.

Financial Statements

Reports that provide an overview of a company's financial condition, including balance sheet, income statement, and cash flow statement.

Paid-In Capital

Funds raised by a company through the sale of its own shares.