What is the main purpose of an external confirmation sent to a customer about its account balance?
Correct answer: A. To test the existence of a receivable
- A. To test the existence of a receivable
- B. To calculate the depreciation expense
- C. To assess staff performance
- D. To inspect the sales ledger format
Explanation
A customer confirmation provides evidence about whether the receivable exists and, often, whether its balance is accurate. It does not calculate depreciation or evaluate the design of the sales ledger.
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About Auditing
Auditing examines accounting records and financial statements to determine whether they present a reliable and fairly stated position. The subject covers audit objectives, internal controls, audit evidence, materiality, vouching, verification, working papers, auditor independence, audit reports, and the distinction between an audit and accounting or investigation.
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