Discuss the advantages and disadvantages of using negative accounts receivable confirmations rather than positive confirmations.

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Discuss the advantages and disadvantages of using negative accounts receivable confirmations rather than positive confirmations.


Answer:

The primary advantage of negative confirmations is that they are less expensive than positive confirmations because there are no second requests and no follow-up of nonresponses. The primary disadvantage of negative confirmations is that they are less reliable than positive confirmations because a nonresponse must be regarded as a correct response, even though the debtor may have ignored the confirmation request.

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