Question 1

Match the test of controls described below to the appropriate assertion it is used to test:
-Review of cash receipts journal for unusual items

Accepted Answer

A) Accuracy 
B) Authorization 
C) Classification 
D) Occurrence 
E) Completeness
F)Cutoff 
A) Accuracy 
B) Authorization 
C) Classification 
D) Occurrence 
E) Completeness
F)Cutoff

Question 2

Credit authorization is used to determine if a customer is able to pay for goods.

Accepted Answer

A) True 
 B)False

Question 3

Auditors sometimes use ratios as audit evidence. For example, an unexplained increase in the ratio of gross profit to sales may suggest which of the following possibilities?

Accepted Answer

A) Fictitious purchases. 
B) Fictitious sales. 
C) Selling and general expenses erroneously being recorded as merchandise purchases. 
D) Unrecorded sales. 
A) Fictitious purchases. 
B) Fictitious sales. 
C) Selling and general expenses erroneously being recorded as merchandise purchases. 
D) Unrecorded sales.

Question 4

Which of the following is not an inherent risk factor for the revenue process?

Accepted Answer

A) Complexity of revenue recognition issues. 
B) Difficulty of auditing transactions. 
C) Special industry practices. 
D) The entity does not follow its stated policies for sales order approvals. 
A) Complexity of revenue recognition issues. 
B) Difficulty of auditing transactions. 
C) Special industry practices. 
D) The entity does not follow its stated policies for sales order approvals.

Question 5

Tracing copies of sales invoices to shipping documents will provide evidence that all:

Accepted Answer

A) shipments to customers were recorded as receivables. 
B) billed sales were shipped. 
C) accounts receivable ledger is complete. 
D) shipments to customers were billed. 
A) shipments to customers were recorded as receivables. 
B) billed sales were shipped. 
C) accounts receivable ledger is complete. 
D) shipments to customers were billed.

Question 6

In auditing accounts receivable, the negative form of confirmation request most likely would be used when:

Accepted Answer

A) recipients are likely to return positive confirmation requests without verifying the accuracy of the information. 
B) the combined assessed level of inherent and control risk relative to accounts receivable is low. 
C) a small number of accounts receivable are involved but a relatively large number of errors are expected. 
D) the auditor performs a dual purpose test that assesses control risk and obtains substantive evidence. 
A) recipients are likely to return positive confirmation requests without verifying the accuracy of the information. 
B) the combined assessed level of inherent and control risk relative to accounts receivable is low. 
C) a small number of accounts receivable are involved but a relatively large number of errors are expected. 
D) the auditor performs a dual purpose test that assesses control risk and obtains substantive evidence.

Question 7

In which of the following circumstances would the use of the negative form of accounts receivable confirmation most likely be justified?

Accepted Answer

A) A substantial number of accounts may be in dispute and the accounts receivable balance arises from sales to a few major customers. 
B) A substantial number of accounts may be in dispute and the accounts receivable balance arises from sales to many customers with small balances. 
C) A small number of accounts may be in dispute and the accounts receivable balance arises from sales to a few major customers. 
D) A small number of accounts may be in dispute and the accounts receivable balance arises from sales to many customers with small balances. 
A) A substantial number of accounts may be in dispute and the accounts receivable balance arises from sales to a few major customers. 
B) A substantial number of accounts may be in dispute and the accounts receivable balance arises from sales to many customers with small balances. 
C) A small number of accounts may be in dispute and the accounts receivable balance arises from sales to a few major customers. 
D) A small number of accounts may be in dispute and the accounts receivable balance arises from sales to many customers with small balances.

Question 8

What inherent risk factors should an auditor consider when auditing the revenue process of a computer manufacturer?

Accepted Answer

The auditor will want to consider indust

Match the test of controls described below to the appropriate assertion it is used to test: -Review of cash receipts journal for unusual items

Credit authorization is used to determine if a customer is able to pay for goods.

Auditors sometimes use ratios as audit evidence. For example, an unexplained increase in the ratio of gross profit to sales may suggest which of the following possibilities?

Which of the following is not an inherent risk factor for the revenue process?

Tracing copies of sales invoices to shipping documents will provide evidence that all:

In auditing accounts receivable, the negative form of confirmation request most likely would be used when:

In which of the following circumstances would the use of the negative form of accounts receivable confirmation most likely be justified?

What inherent risk factors should an auditor consider when auditing the revenue process of a computer manufacturer?

An Introduction to Assurance and Financial Statement Auditing

The Financial Statement Auditing Environment

Audit Planning, Types of Audit Tests, and Materiality

Risk Assessment

Evidence and Documentation

Internal Control in a Financial Statement Audit

Auditing Internal Control Over Financial Reporting

Audit Sampling: An Overview and Application to Tests of Controls

Audit Sampling: An Application to Substantive Tests of Account Balances

Auditing the Purchasing Process

Auditing the Human Resource Management Process

Auditing the Inventory Management Process

Auditing the Financinginvesting Process: Prepaid Expenses, Intangible Assets, and Property, Plant, and Equipment

Auditing the Financinginvesting Process: Long-Term Liabilities, Stockholders' Equity, and Income Statement Accounts

Auditing the Financinginvesting Process: Cash and Investments

Completing the Audit Engagement

Reports on Audited Financial Statements

Professional Conduct, Independence, and Quality Control

Legal Liability

Assurance, Attestation, and Internal Auditing Services

Filters

Exam 10: Auditing the Revenue Process

Match the test of controls described below to the appropriate assertion it is used to test: -Review of cash receipts journal for unusual items

Credit authorization is used to determine if a customer is able to pay for goods.

Auditors sometimes use ratios as audit evidence. For example, an unexplained increase in the ratio of gross profit to sales may suggest which of the following possibilities?

Which of the following is not an inherent risk factor for the revenue process?

Tracing copies of sales invoices to shipping documents will provide evidence that all:

In auditing accounts receivable, the negative form of confirmation request most likely would be used when:

In which of the following circumstances would the use of the negative form of accounts receivable confirmation most likely be justified?

What inherent risk factors should an auditor consider when auditing the revenue process of a computer manufacturer?

An Introduction to Assurance and Financial Statement Auditing

The Financial Statement Auditing Environment

Audit Planning, Types of Audit Tests, and Materiality

Risk Assessment

Evidence and Documentation

Internal Control in a Financial Statement Audit

Auditing Internal Control Over Financial Reporting

Audit Sampling: An Overview and Application to Tests of Controls

Audit Sampling: An Application to Substantive Tests of Account Balances

Auditing the Purchasing Process

Auditing the Human Resource Management Process

Auditing the Inventory Management Process

Auditing the Financinginvesting Process: Prepaid Expenses, Intangible Assets, and Property, Plant, and Equipment

Auditing the Financinginvesting Process: Long-Term Liabilities, Stockholders' Equity, and Income Statement Accounts

Auditing the Financinginvesting Process: Cash and Investments

Completing the Audit Engagement

Reports on Audited Financial Statements

Professional Conduct, Independence, and Quality Control

Legal Liability

Assurance, Attestation, and Internal Auditing Services

Filters