Question
The most effective audit procedure for determining the collectability of an account receivable is the A. Review of the subsequent cash collections. B. Examination of
The most effective audit procedure for determining the collectability of an account receivable is the
A. Review of the subsequent cash collections.
B. Examination of the related sales invoice(s).
C. Confirmation of the account.
D. Review of authorization of credit sales to the customer and the previous history of collections.
The answer as given by my professor should be A. After looking up the term subsequent google tells me it means coming after something in time; following.
So my question is, how is reviewing future cash collections going to determine the collectability of an accounts receivable. It would make sense if we were looking for past cash collections.
Any assistance would be greatly appreciated!
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