1. In auditing accounts receivable, the negative form of confirmation request most likely would be used when

a. Accounts receivable consist of a number of accounts with large customer balances. b. Control Risk and Inherent Risk are assessed to be High.

c. Recipients are likely to return positive confirmation requests without verifying the accuracy of the information. d. The auditor is not aware of circumstances or conditions that would cause recipients of negative confirmation requests to disregard such requests

2. If a positive accounts receivable confirmation request is not returned to the auditor, alternative procedures would be performed. An alternative procedure would be:

a. send a second request to the customer.

b. select a new customer balance for confirmation.

c. examination of specific subsequent cash receipts.

d. research and determine the credit score of the customer.

3. Consider the following statements:

I. Lapping involves covering a theft related to accounts receivable by using a later cash receipt to

cover the previous theft.

II. An important confirmation requests that customers respond whether they agree or not with the amount due to the entity stated in the confirmation.

a. I is true; II is true

b. I is true; II is false

c. I is false; II is true

d. I is false; II is false

4. An aged trial balance of accounts receivable is normally used by the auditor to evaluate the adequacy of the allowance for doubtful accounts involving accounts receivable. The companys credit terms are 2% 10, net 30. The aged trial balance was made on December 31, year 1. The auditor reviews the work on January 30, year 2. An outstanding accounts receivable on December 31, year 1 was for a sale invoiced on October 15, year 1 would be classified on the aged trial balance as:

a. Current.

b. Past due

c. More than 30 days past due.

d. More than 60 days past due.