What is the most important test of details of balances for accounts receivable?
A) obtaining confirmations from the client's customers
B) recalculating the aged receivables and uncollectible accounts
C) tracing credit memos for returned merchandise to receiving room reports
D) tracing from shipping documents to journals to the accounts receivable ledger

Question

Quizplus · Accepted Answer

Obtaining confirmations from the client's customers is the most important test of details of balances for accounts receivable, as it provides external evidence of the validity and accuracy of the balances. It helps to confirm the existence of the receivables, their completeness, valuation, and collectability. Recalculating the aged receivables and uncollectible accounts, tracing credit memos for returned merchandise to receiving room reports, and tracing from shipping documents to journals to the accounts receivable ledger are also important tests, but obtaining confirmations from customers is the most crucial one.

What Is the Most Important Test of Details of Balances