Homer and Moe,PC are auditing the financial statements of Lyoncraft,Inc.and decide to confirm a sample of accounts receivable.This test is performed by Homer and Moe primarily to substantiate which of the following?
A)existence of related party transactions.
B)existence of accounts receivable.
C)obligation of debt.
D)cutoff of the allowance for bad debt.

Question

Quizplus · Accepted Answer

Confirming a sample of accounts receivable helps Homer and Moe to substantiate the existence of accounts receivable, which is a key account balance on the financial statements. By confirming the balances with the customers, they can ensure that the amounts are valid and accurate. The other options listed may require different audit procedures to test for these assertions.

Homer and Moe,PC Are Auditing the Financial Statements of Lyoncraft,Inc