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

An aged trial balance of accounts receivable is used by the auditor to evaluate the allowance for doubtful accounts by analyzing the total amount of outstanding receivables and how long they have been outstanding. This analysis helps the auditor to determine if the allowance for doubtful accounts is adequate and if any adjustments need to be made. The other choices are not directly related to the use of an aged trial balance of accounts receivable.

Audit Documents Often Include an Aged Trial Balance of Accounts