Given data from testing the year-end Accounts Receivable balance: Number of Book Balance Balance determined accounts by the auditor Population 3,000 $800,000 Sample 320 $64,000 $58.000 Using dolar-ratio estimation, the estimate of the year-end Accounts Receivable is Oa $743,750 Ob. $794,000 Oc $543,750 Od. $720,000 Oe $725,000
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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