A continuing audit client's property,plant,and equipment and accounts receivable accounts have approximately the same year-end balance.In this circumstance,when compared to property,plant and equipment,one would normally expect the audit of accounts receivable to require:
A)More audit time.
B)Less audit time.
C)Approximately the same amount of audit time.
D)Similar confirmation procedures.

Question

Quizplus · Accepted Answer

Accounts receivable is a high-risk account with a higher likelihood of misstatement due to the subjective nature of estimates such as bad debts, credit terms, and allowances for returns. Therefore, it typically requires more audit time to gather sufficient evidence to support the existence and valuation of the accounts. On the other hand, property, plant, and equipment are usually lower-risk accounts with more objective and verifiable transactions, making the audit process smoother than accounts receivable.

A Continuing Audit Client's Property,plant,and Equipment and Accounts Receivable Accounts