Question

When there are a large number of relatively small account balances, negative confirmation of accounts receivable is feasible if the combination of inherent risk and control risk is:

A. Low, and the individuals receiving the confirmation requests are unlikely to give them adequate consideration.
B. High, and the individuals receiving the confirmation requests are likely to give them adequate consideration.
C. High, and the individuals receiving the confirmation requests are unlikely to give them adequate consideration.
D. Low, and the individuals receiving the confirmation requests are likely to give them adequate consideration

Answer 1

The correct option is D

Step-by-step explanation:

When there are huge number of the small account balances, then the negative confirmation of the accounts receivable is practical or feasible which is issued by an auditor to the customers of client company and if the combination of the control as well as the inherent risk is low and the individuals who receives the confirmation requests which provide them sufficient consideration.