Accounting · Audit Evidence
An auditor is concerned that a substantial outstanding debt due from a major customer may not be recoverable, which could significantly affect the entity's viability. Which of the following provides the most reliable audit evidence regarding the recoverability of this debt?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Legal correspondence between the entity's lawyer and the customer's lawyers confirming that the amount will be paid
- 2Receipt of a full cash payment from the customer recorded during the subsequent events review✓
- 3A response from the customer confirming the outstanding balance during audit circularization
- 4A written management representation confirming its recoverability
Correct answer
Receipt of a full cash payment from the customer recorded during the subsequent events review
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