Existence of trade receivables is usually verified by:
A) examining copies of sales invoices sent to the client's customers.
B) sending confirmations to the client's customers.
C) calculating changes in the receivables balance from one year to the next.
D) evaluating the adequacy of the provision for doubtful accounts.

Question

Quizplus · Accepted Answer

The most reliable way to verify the existence of trade receivables is through direct confirmation with the client's customers. This ensures that the balances are accurate and are actually expected to be collected. A&B are the common methods to verify the existence of trade receivables, but examining copies of sales invoices only shows that a sale was made, not if the receivable was paid or not. Calculating changes in the receivables balance may show if there are any discrepancies, but does not verify the actual existence of the receivables. Evaluating the adequacy of the provision for doubtful accounts is related to the valuation and accuracy of the receivables balance, but does not directly verify their existence.

Existence of Trade Receivables Is Usually Verified By