Which of the following is not a primary objective of the auditors in the examination of accounts receivable?

A. Determine the approximate realizable value.

B. Consider the adequacy of internal control.

C. Establish the existence of receivables.

D. Determine the expected day of collection of each of the receivables.

Question

Business

Demarion

7 November, 06:00

Which of the following is not a primary objective of the auditors in the examination of accounts receivable?

A. Determine the approximate realizable value.

B. Consider the adequacy of internal control.

C. Establish the existence of receivables.

D. Determine the expected day of collection of each of the receivables.

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Answers (1)

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Alisa Watson · Answer 1

D. Determine the expected day of collection of each of the receivables.

Explanation:

An auditor's primary concern should be to verify the existence and size of the accounts receivable. The auditor should evaluate the suitability of the internal control systems for account receivable.

Determinating the expected day of collection for each receivable is good, but should not be the primary responsibility of an auditor handling accounts receivable. While accounts receivable is a function of the accounting department, the collection of debts is a role of credit control. Managing the level of credit and their due dates is not a function of the account receivable section. For this reason, examining the actual time of collection should be done when auditing the credit department.