Homer and Moe,PC are auditing the financial statements of Lyoncraft,Inc.and decide to confirm a sample of accounts receivable.This test is performed by Homer and Moe primarily to substantiate which of the following assertions?
A)Existence of related party transactions.
B)Existence of accounts receivable.
C)Obligation of debt.
D)Cutoff of the allowance for bad debt.

Question

Quizplus · Accepted Answer

Confirming accounts receivable is performed primarily to substantiate the existence of accounts receivable, as it confirms that the amounts recorded in the financial statements are valid and owed by customers. It does not relate to existence of related party transactions, obligation of debt, or cutoff of the allowance for bad debt.

Homer and Moe,PC Are Auditing the Financial Statements of Lyoncraft,Inc