1. [True or False]

A way to test accounts receivable for completeness [understatement] is to test sales for understatement.

a. Statement is False.

b. Statement is True

2. 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, year2. An outstanding accounts receivable on December 31, year 1 was for a sale invoiced on November 22, 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.

3. 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.