Existence of trade receivables is usually verified by:
A) examining copies of sales invoice 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 debts.

Question

Quizplus · Accepted Answer

Sending confirmations to the client's customers is the best way to verify the existence of trade receivables, as it directly confirms with the customers whether they owe any money to the client. Examining copies of sales invoice only shows that invoices were issued, but not whether the amounts were actually received. Calculating changes in the receivables balance may indicate if there are issues with collectability, but it doesn't verify the existence of the receivables. Evaluating the adequacy of the provision for doubtful debts is important, but it doesn't directly verify the existence of the trade receivables.

Existence of Trade Receivables Is Usually Verified By