ACCA Audit and Assurance (F8) Practice Exam

What is typically NOT a focus when assessing accounts receivable?

1. Accounts written-off in the period

2. Accounts paid in full

3. Accounts with credit balances

4. Old unpaid accounts

The correct answer is: Accounts paid in full

When assessing accounts receivable, the focus is primarily on identifying the risks related to outstanding debts. This includes evaluating factors such as the collectibility of overdue accounts, overall debt management, and ensuring that the company’s financial statements accurately reflect its assets. Accounts paid in full typically do not present an assessment concern since they are settled debts and are not part of the outstanding receivables that require analysis. The accuracy of the financial position can be confirmed for these accounts, and they do not pose any collection risk or highlight issues with credit policies. In contrast, areas like accounts written off, accounts with credit balances, and old unpaid accounts provide insight into the effectiveness of credit controls, the potential for future cash flows, and the company's customer relationship management, making them more relevant for analysis in the context of accounts receivable.