To determine whether any accounts receivable are pledged or assigned to others,the auditor would most likely perform which of the following?
A)examine subsequent collections.
B)test a sample of transactions to the general ledger.
C)review loan agreements and board of directors' minutes.
D)derive an independent estimate of the allowance and compare it to pledged assets.

Question

Quizplus · Accepted Answer

Reviewing loan agreements and board of directors' minutes would provide information about any accounts receivables that have been pledged or assigned to others. This information may not be available through examining subsequent collections or testing transactions to the general ledger. Deriving an independent estimate of the allowance and comparing it to pledged assets is not a relevant procedure to determine whether accounts receivable have been pledged or assigned to others.

To Determine Whether Any Accounts Receivable Are Pledged or Assigned