The most important test of details of balances to determine the existence of recorded accounts receivable is
A)tracing sales entries to shipping documents.
B)tracing the credits in accounts receivable to bank deposits.
C)tracing sales returns entries to credit memos issued and receiving room reports.
D)sending external confirmations of customers' balances.

Question

Quizplus · Accepted Answer

Sending external confirmations of customers' balances is the most important test of details of balances to determine the existence of recorded accounts receivable as it provides direct evidence from customers about the validity of their account balances. Tracing sales entries to shipping documents and tracing sales returns entries to credit memos issued and receiving room reports are important tests, but they only provide indirect evidence of the existence of accounts receivable. Tracing credits in accounts receivable to bank deposits is important for verifying the completeness of accounts receivable, but it does not directly address the existence assertion.

The Most Important Test of Details of Balances to Determine