The audit working papers often include a client-prepared, aged trial balance of accounts receivable as of the balance sheet date.This aging is BEST used by the auditor to:
A) evaluate internal control over credit sales.
B) estimate credit losses.
C) test the accuracy of recorded charge sales.
D) verify the validity of the recorded receivables.

Question

Quizplus · Accepted Answer

The aged trial balance of accounts receivable is most useful for estimating credit losses, as it allows the auditor to analyze the collectability of individual accounts and estimate the amount of potential bad debt expense. While the aging may provide some insights into internal control over credit sales, accuracy of recorded charge sales, and validity of recorded receivables, these are not the primary purposes of the aging schedule.

The Audit Working Papers Often Include a Client-Prepared, Aged Trial