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

For cash receipts, the occurrence transaction-related audit objective affects which of the following balance-related audit objective?

The accounts receivable balance-related audit objective net realizable value is not affected by assessed control risk for sales or cash receipts.

Both U.S.and international auditing standards require the use of confirmations for accounts receivable.

An auditor selects a sample from the file of shipping documents to determine whether invoices were prepared.This test is to satisfy the audit objective of:

The most effective audit evidence gathered for accounts receivable is the:

Tests of details of balances focus on testing the year-end balances of balance sheet accounts.

The positive (as opposed to the negative)form of receivables confirmation may be preferred when:

The most important test of details of balances to determine the existence of recorded accounts receivable is:

A type of positive confirmation known as a blank confirmation:

A confirmation is a type of audit evidence.

Confirmation is the most common test of details of balances for the accuracy of accounts receivable.

The two primary classes of transactions in the sales and collection cycle are:

When sending confirmations during most audits of accounts receivable, the emphasis is often on confirming larger and older accounts.

Negative confirmations normally require a larger sample size than positive confirmations.

Cutoff misstatements can occur for sales, sales returns, and cash receipts.List below the threefold approach an auditor performs for each account above to determine the reasonableness of the cutoff.

Tests of the realizable value balance-related audit objective are for the purpose of evaluating the allowance for doubtful accounts.

Because of its central role in auditing of accounts receivable, which of the following would normally be one of the first items tested?

Cutoff misstatements occur when:

Describe each of the following types of confirmations: •Positive confirmation •Blank confirmation •Invoice confirmation •Negative confirmation

For sales, the completeness transaction-related audit objective affects the existence balance-related audit objective.