Calculating the turnover of receivables is often used in testing the sales cycle by auditors when performing which of the following?
A)Trend analysis.
B)Ratio analysis.
C)Reasonableness testing.
D)Nonstatistical sampling.

Question

Quizplus · Accepted Answer

Calculating the turnover of receivables is part of ratio analysis, which is used by auditors to test the sales cycle. Ratio analysis involves comparing different financial ratios to industry benchmarks or historical trends to identify potential areas of risk or misstatement. By analyzing the turnover of receivables, auditors can gain insights into how quickly a company is collecting on its outstanding invoices and whether there are any significant delays or write-offs that could impact financial performance.

Calculating the Turnover of Receivables Is Often Used in Testing