Exam 16: Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Communication addressed to the debtor requesting him or her to confirm whether the balance as stated on the communication is correct or incorrect is a:

For most audits, a proper cash receipts cutoff is less important than the sales cutoff because the improper cutoff of cash:

When an auditor uses negative confirmations, several factors must be considered.What are those factors?

When should auditors not perform alternative procedures in testing the accounts receivable balance?

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

The audit procedure that provides the auditor with the most appropriate evidence when performing test of details of balances for accounts receivable is:

Assuming the client's internal controls are adequate, describe how the auditor can verify proper cutoff of sales transactions.

Auditors use the results of the substantive tests of transactions of sales and the collection cycle to determine the extent to which inherent risk is satisfied for each accounts receivable balance-related audit objective.

When positive confirmations are used, auditing standards require alternative procedures for confirmations not returned by the customer.Which of the following would not be considered an alternative procedure?

A procedure to test for a cash receipts cutoff error is:

Which of the following is likely to be determined first when performing tests of details for accounts receivable?

The understatement of sales and accounts receivable is best uncovered by:

Testing the information on the aged trial balance for detail tie-in is a necessary audit procedure, which would normally include:

You are reviewing sales to discover cutoff problems.If the client's policy is to record sales when title to the merchandise passes to the buyer, then the books and records would contain errors if the December 31 entries were for sales recorded:

Tests of detail tie-in are normally conducted last in the audit of the sales and collections cycle.

An auditor is performing a credit analysis of customers with balances over 60 days due.She is most likely obtaining evidence for which audit related objective?

Which of the following is the principle "weakness" of using negative confirmations for your tests of details of balances for accounts receivable?

Favorable results from analytical procedures may reduce the extent to which the auditor needs to test details of balances.

A high inherent risk increases planned detection risk and decreases planned substantive tests.

Auditors are especially concerned with three aspects of internal control for the sales and collection cycle.Which of the following is not one of their major concerns?