During your examination of the accounts receivable of Hope Ranch, a new client, you notice that one

Question:

During your examination of the of Hope Ranch, a new client, you notice that one account is much larger than the rest, and you therefore decide to examine the evidence supporting this customer’s account. Comment on the relative reliability and adequacy of the following types of evidence:
a. Computer printout from subsidiary ledger.
b. Copies of sales invoices in amount of the receivable.
c. Purchase orders received from customer.
d. Shipping documents describing the articles sold.
e. Letter received by client from customer acknowledging the correctness of the receivable in the amount shown on client’s accounting records.
f. Letter received by auditors directly from customer acknowledging the correctness of the amount shown as receivable on client’s accounting records.

Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...