Question

A CPA auditing an electric utility wishes to determine whether all customers are being billed. The CPA's best direction of test is from the ______________.

1) meter department records to the billing (sales) register
2) billing (sales) register to the meter department records
3) accounts receivable ledger to the billing (sales) register
4) billing (sales) register to the accounts receivable ledger

Answer 1

To determine if all customers are being billed, the CPA should compare the billing register to the accounts receivable ledger.

Step-by-step explanation:

The CPA auditing an electric utility can best determine whether all customers are being billed by comparing the billing (sales) register to the accounts receivable ledger. This comparison allows the CPA to verify that all sales recorded in the billing register are indeed reflected in the accounts receivable ledger, indicating that customers have been billed. If there are any discrepancies or missing entries, it would suggest that not all customers are being billed.