What evidence is utilized by the auditor for analytical purposes in substantiating the allowance for bad debt estimate?
A)Accounts receivable aging schedule
B)Copies of checks received from customers.
C)Confirmations returned without exception.
D)Stock prices of customer companies.

Question

Quizplus · Accepted Answer

The accounts receivable aging schedule is used to analyze the company's receivables and identify potential bad debt. It helps the auditor to substantiate the allowance for bad debt estimate by identifying the amount and age of outstanding receivables. B is not relevant to the allowance for bad debt estimate, as copies of checks received from customers only confirm the occurrence of transactions, not the collectability. C is relevant but not exclusively used for analytical purposes in substantiating the allowance for bad debt estimate. D is not relevant to the allowance for bad debt estimate, as stock prices of customer companies do not provide information about the collectability of outstanding receivables.

What Evidence Is Utilized by the Auditor for Analytical Purposes