Confirmation of Accounts Receivables.

Cesare Mastali, Dottore Commercialista

(CONSOB), is examining the financial statements of a manufacturing company in Milano, Italy, with a significant amount of trade accounts receivable. Mastali is satisfied that the accounts are properly summarized and classified, and are valued in accordance with international accounting standards. Mastali plans to use accounts receivable confirmation requests.

Required

A. Identify and describe the two forms of accounts receivable confirmation requests and indicate what factors Mastali should consider in determining when to use each.

B. Assume Mastali has received a satisfactory response to the confirmation requests.

Describe how Mastali could evaluate collectability of the trade accounts receivable.