The Multiple Choice Questions Blog

Which ONE of the following is the most reliable evidence of the VALUATION of trade receivables?

Select ONE answer:

1. Analysis of after-date receipts
2. A comparison of current year-end total with previous year
3. Reconciliation of receivables ledger and receivables ledger control account
4. Reconstruction of receivables balance by tracing individual amounts invoiced to despatch notes

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct – Whereas the other procedures described are helpful with respect to the valuation assertion, subsequent receipt of cash confirms absolutely that the balance was recoverable at the year end.
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

The following statement applies to the use of the positive or negative method of direct confirmation of receivables.

For this statement, select whether it applies to a situation where the positive method should be used, to a situation where the negative method could be used, it depends on the size of the business, or it should be referred to a more senior auditor.

• There is no reason to believe that respondents will disregard the requests.

Select ONE answer:

1. Depends on the size of the business
2. Consult a senior colleague
3. Positive method
4. Negative method

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct – The negative method of direct confirmation of receivables (i.e., only receiving responses by exception) could be used when a substantial number of misstatements is not expected and there is no need to believe that respondents will disregard these requests. In other circumstances the positive method should be used.

This work is licensed under a Creative Commons Attribution 4.0 International License.

The following statement applies to the use of the positive or negative method of direct confirmation of receivables.

For this statement, select whether it applies to a situation where the positive method should be used, to a situation where the negative method could be used, it depends on the size of the business, or it should be referred to a more senior auditor.

• A substantial number of misstatements is not expected.

Select ONE answer:

1. Depends on the size of the business
2. Positive method
3. Negative method
4. Consult a senior colleague

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct – The negative method of direct confirmation of receivables (i.e., only receiving responses by exception) could be used when a substantial number of misstatements is not expected and there is no need to believe that respondents will disregard these requests. In other circumstances the positive method should be used.
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

The following statement applies to the use of the positive or negative method of direct confirmation of receivables.

For this statement, select whether it applies to a situation where the positive method should be used, to a situation where the negative method could be used, it depends on the size of the business, or it should be referred to a more senior auditor.

• A small number of large balances is involved.

Select ONE answer:

1. Depends on the size of the business
2. Positive method
3. Negative method
4. Consult a senior colleague

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct – The negative method of direct confirmation of receivables (i.e., only receiving responses by exception) could be used when a substantial number of misstatements is not expected and there is no need to believe that respondents will disregard these requests. In other circumstances the positive method should be used.
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

The following statement applies to the use of the positive or negative method of direct confirmation of receivables.

For this statement, select whether it applies to a situation where the positive method should be used, to a situation where the negative method could be used, it depends on the size of the business, or it should be referred to a more senior auditor.

• The assessed risk of material misstatement is high.

Select ONE answer:

1. Positive method
2. Negative method
3. Consult a senior colleague
4. Depends on the size of the business

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct – The negative method of direct confirmation of receivables (i.e., only receiving responses by exception) could be used when a substantial number of misstatements is not expected and there is no need to believe that respondents will disregard these requests. In other circumstances the positive method should be used.
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.