The most important test of details of balances to determine the existence of recorded accounts receivable is
A) tracing details of sales invoices to shipping documents.
B) tracing the credits in accounts receivable to bank deposits.
C) tracing sales returns entries to credit memos issued and receiving room reports.
D) the confirmation of customers' balances.

Question

Quizplus · Accepted Answer

The confirmation of customers' balances is the most reliable test of details of balances to determine the existence of recorded accounts receivable, as it involves obtaining direct communication from the customers themselves to verify the amounts they owe. Tracing details of sales invoices to shipping documents and tracing sales returns entries to credit memos issued and receiving room reports are important tests, but they are not as reliable as customer confirmations as they do not provide direct communication from the customers. Tracing the credits in accounts receivable to bank deposits is not a relevant test for the existence of recorded accounts receivable, as it pertains more to cash receipts than accounts receivable balances.

The Most Important Test of Details of Balances to Determine