When allocating the preliminary judgment about materiality for the financial statements, accounts receivable is typically one of the most material accounts in the financial statements for companies selling on credit.

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Accounts receivable represents the amounts owed to a company by its customers and is usually a significant portion of a company's assets. As it involves estimates of credit risk and potential bad debts, the misstatement in accounts receivable can have a material impact on the financial statements, making it one of the most material accounts for companies selling on credit. Hence, allocating the preliminary judgment about materiality for the financial statements involves considering accounts receivable.

When Allocating the Preliminary Judgment About Materiality for the Financial