It is the auditor's job to review the client's estimate to evaluate whether it has been determined in accordance with the applicable financial reporting framework.To do this,the auditor considers whether the allowance for doubtful accounts is properly valued based on
A)the accounts written off during the prior year
B)the accounts receivable balance at the end of the prior year
C)prior economic conditions
D)the economic status of current customers
E)the net receivable balance that should represent the amount of cash the company expects to collect in the following year
F)both A and C
G)both B and D
H)Both D and E

Question

Quizplus · Accepted Answer

The auditor should review the client's estimate for allowance for doubtful accounts based on the economic status of current customers and the net receivable balance that should represent the amount of cash the company expects to collect in the following year. These factors would be considered to properly value the allowance for doubtful accounts in accordance with the applicable financial reporting framework.

It Is the Auditor's Job to Review the Client's Estimate