Most tests of accounts receivable and the allowance for uncollectible accounts are based on:
A) the general ledger balance of each account.
B) the results of confirmations.
C) the aged trial balance.
D) the results of analytical procedures.

Question

Quizplus · Accepted Answer

The most common method for testing accounts receivable and the allowance for uncollectible accounts is the aged trial balance. This report categorizes the receivables by age (30 days, 60 days, 90 days, etc.) and provides a total balance that can be compared to the general ledger balance. This report can also be used to test the estimation of the allowance for uncollectible accounts by comparing the estimated allowance balance to the actual balance of bad debts written off during the period. While confirmations and analytical procedures can be used in conjunction with the aged trial balance, they are not the primary methods used for testing these accounts.

Most Tests of Accounts Receivable and the Allowance for Uncollectible