Which assertion do auditors test when they test for the adequacy of the allowance for doubtful accounts?
A) accuracy, valuation, and allocation
B) rights and obligations
C) classification
D) occurrence

Question

Quizplus · Accepted Answer

When auditors test for the adequacy of the allowance for doubtful accounts, they are primarily testing the accuracy, valuation, and allocation assertion. This assertion is concerned with whether the allowance for doubtful accounts is appropriate based on the company's historical bad debt experience and current economic conditions. Other assertions, such as rights and obligations, classification, and occurrence, may also be relevant to the audit of the allowance for doubtful accounts, but they are not the primary focus of this test.

Which Assertion Do Auditors Test When They Test for the Adequacy