Explain why the aging of accounts receivable and accounts payable is of interest to the auditors. Also, explain how this analysis helps in evaluating the judgement of management on the collectability of receivables and payment of payables in future. Determine whether a dashboard item which reflects this aging would be useful for the continuous audit.

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Chapter 6, Problem 1P

To determine

Explain why the aging of accounts receivable and accounts payable is of interest to the auditors. Also, explain how this analysis helps in evaluating the judgement of management on the collectability of receivables and payment of payables in future. Determine whether a dashboard item which reflects this aging would be useful for the continuous audit.

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