CA Inter P5 · Chapter 5 · Question 5 of 12
The auditor of Garima Distributors Ltd. examines cash received from customers in the six weeks after the year-end and matches it to year-end receivable balances. This procedure provides evidence mainly about:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Existence and valuation (recoverability) of trade receivables
Explanation
Subsequent receipts against year-end balances show that the debts existed and were recoverable, supporting existence and valuation. Balances that remain unpaid long after the year-end may need an allowance for expected credit losses. The procedure says nothing about payables, purchases or share capital.
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