question 40A client has a separate sales group for its largest preferred customers, a select group of customers who normally make purchases in excess of $250,000 and often have balances of over $1,000,000. Whcih of the following audit procedures would the auditor most likely perform? Prepare a schedule of purchases and payments for these customers. Send out negative confirmations on a large sample of these customers. Inquire of the sales manager regarding accounts receivable items. Send out positive confirmations on a large sample of these customers.

Audit procedures are actions taken by auditors to obtain all relevant information about the quality of financials provided by the firm, allowing them to form an opinion on whether the financial statements reflect a true and fair picture of the company's financial situation.Client is having a 'preferred' sales group of customer, who generally purchases in excess and generally have account receivable balance in excess as well. Payments and purchases It is possible that a timetable will be utilized to test transactions. Negative confirmations are not a good choice for huge account balances, therefore don't send them. Accounts receivable terms do not include information on balances and transaction amounts. When there are a few significant accounts, the most likely audit procedure is to send out good confirmations. Therefore, the correct option is (d)

Answered: A client has a separate sales group for…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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question 40

A client has a separate sales group for its largest preferred customers, a select group of customers who normally make purchases in excess of $250,000 and often have balances of over $1,000,000. Whcih of the following audit procedures would the auditor most likely perform?

		Prepare a schedule of purchases and payments for these customers.
		Send out negative confirmations on a large sample of these customers.
		Inquire of the sales manager regarding accounts receivable items.
		Send out positive confirmations on a large sample of these customers.

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