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:

Encoding Failure

a situation in which information does not enter the long-term memory due to inadequate attention to or processing of the information.

Rehearsal

The act of practicing or repeating information or actions to enhance memory or performance.

Short-Term Memories

Memory storage that holds small amounts of information for short periods of time, typically seconds to minutes.

Unrehearsed Memories

Memories that have not been intentionally recalled or practiced, often less vivid or reliable than rehearsed memories.