Final answer:
Confirmation of balances with debtors
Evaluating internal controls over the collection process provides the best information about the collectibility of notes receivable.
Other procedures mentioned in the question, such as confirmation of balances with debtors, review of credit ratings, and analysis of historical bad debt percentages, are less comprehensive.
Step-by-step explanation:
Evaluation of internal controls over the collection process provides the best information about the collectibility of notes receivable.
By assessing the effectiveness of internal controls, such as segregation of duties and procedures for approving and tracking collections, a company can determine the reliability of its collection process.
The evaluation of internal controls can help identify any weaknesses or risks in the collection process that may affect the collectibility of notes receivable.
For example, if there are inadequate controls in place, it may increase the likelihood of late or unpaid payments by debtors.
While the other procedures mentioned in the question can provide some information about collectibility, they are not as comprehensive as evaluating internal controls.
The review of credit ratings and analysis of historical bad debt percentages provide limited insight into the specific collectibility of notes receivable, as they focus more on the creditworthiness of debtors in general.