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:

Underlying Emotion

The fundamental feeling or affect that lies beneath an individual's immediate emotional response or expression.

Alarm Phase

The initial stage of the body's response to stress, activating the fight or flight response and preparing the body to face a threat.

Parasympathetic Division

A branch of the autonomic nervous system responsible for conserving energy and promoting restful states.

Autonomic Nervous System

The part of the nervous system responsible for control of the bodily functions not consciously directed, such as breathing, the heartbeat, and digestive processes.