During the process of confirming receivables as of 30 June 2012, a positive confirmation was returned indicating the 'balance owed as of 30 June was paid on 9 July 2012.' The auditor would most likely:
A) determine whether a customary trade discount was taken by the customer.
B) determine whether there were any changes in the account between 1 July and 9 July 2012.
C) check subsequent cash receipts to confirm that the amount was received.
D) reconfirm the zero balance as of 9 July 2012.

Question

Quizplus · Accepted Answer

The positive confirmation received indicates that the balance as of 30 June was paid on 9 July. The auditor would want to confirm that the payment was actually received by checking subsequent cash receipts. Therefore, choice C is the best choice. Option A is not relevant to the situation because it pertains to a customary trade discount that may have been taken by the customer. Option B is also not relevant because it pertains to changes that may have occurred after the balance was paid. Option D is not necessary since the balance owed as of 30 June was paid on 9 July, a zero balance would already exist.

During the Process of Confirming Receivables as of 30 June