4. (TCO I) Accounts Receivable and Sales Cycle

(1) Which of the following will most likely give the most assurance concerning the valuation assertion of accounts receivable? Select the best response and EXPLAIN why you have selected that answer.

(2) What are the two assertions for which confirmation of accounts receivable balances provides primary evidence? Explain.

(a) Vouching amounts in the subsidiary ledger to details on shipping documents

(b) Comparing accounts receivable turnover ratios with industry statistics for reasonableness.

(c) Inquiring about receivables pledged under loan agreements

(d) Assessing the allowance for uncollectible accounts for reasonableness.