Audit documents often include an aged trial balance of accounts receivable as of the balance sheet date. This aging is used by the auditor to:
A)evaluate internal control over credit sales.
B)test the accuracy of recorded credit sales.
C)evaluate the allowance for doubtful accounts.
D)verify the existence of the recorded receivables.

Question

Quizplus · Accepted Answer

The aged trial balance of accounts receivable is used by the auditor to evaluate the allowance for doubtful accounts, which is a valuation account that estimates the portion of accounts receivable that may not be collected. The aging helps the auditor estimate the likelihood of collection for each account, and the appropriateness of the recorded allowance for doubtful accounts. The other choices are not explicitly related to the use of an aged trial balance.

Audit Documents Often Include an Aged Trial Balance of Accounts