Accounting · Audit Evidence and Procedures
Which of the following is the MOST appropriate substantive procedure to assess whether the allowance for trade receivables is adequate?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Inspect board minutes for evidence that management considers the allowance to be reasonable
- 2Calculate potentially irrecoverable receivables from the aged listing and compare them to the allowance✓
- 3Recalculate the allowance based on gross receivables and agree it to the general ledger
- 4Compare the current year allowance percentage to prior years and investigate any significant variances
Correct answer
Calculate potentially irrecoverable receivables from the aged listing and compare them to the allowance
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