Question 1

A small business owner can best offset the lack of separation of duties by

Accepted Answer

A)  creating an internal audit department. 
B)  installing the latest computer equipment and software. 
C)  being actively involved in the accounting process. 
D)  relying on the external auditor to detect errors. 
A)  creating an internal audit department. 
B)  installing the latest computer equipment and software. 
C)  being actively involved in the accounting process. 
D)  relying on the external auditor to detect errors.

Question 2

The use of confirmations to test accounts receivable is considered a generally accepted audit procedure.
Question also found in study guide

Accepted Answer

A) True 
 B)False

Question 3

A computer generally cannot be used for scanning large files of accounts receivable for unusual credit balances.
Question also found in study guide

Accepted Answer

A) True 
 B)False

Question 4

What procedures should an auditor perform for a positive confirmation that is not returned by the client's customer?

Accepted Answer

Auditors have to perform alternative pro

Question 5

Which of the following controls most likely would help ensure that all credit sales transactions of an entity are recorded?

Accepted Answer

A)  The billing department supervisor sends copies of approved sales orders to the credit department for comparison to authorized credit limits and current customer account balances. 
B)  The accounting department supervisor independently reconciles the accounts receivable subsidiary ledger to the accounts receivable control account monthly. 
C)  The accounting department supervisor controls the mailing of monthly statements to customers and investigates any differences reported by customers. 
D)  The billing department supervisor matches prenumbered shipping documents with entries in the sales journal. 
A)  The billing department supervisor sends copies of approved sales orders to the credit department for comparison to authorized credit limits and current customer account balances. 
B)  The accounting department supervisor independently reconciles the accounts receivable subsidiary ledger to the accounts receivable control account monthly. 
C)  The accounting department supervisor controls the mailing of monthly statements to customers and investigates any differences reported by customers. 
D)  The billing department supervisor matches prenumbered shipping documents with entries in the sales journal.

Question 6

The primary consideration when planning whether to send confirmations of accounts receivable before the balance sheet date is the

Accepted Answer

A)  type of confirmation to be used. 
B)  client's internal control over transactions affecting receivables. 
C)  availability of staff auditors. 
D)  number of customer accounts. 
A)  type of confirmation to be used. 
B)  client's internal control over transactions affecting receivables. 
C)  availability of staff auditors. 
D)  number of customer accounts.

Question 7

Smith Manufacturing Company's accounts receivable clerk has a friend who is also Smith's customer.The accounts receivable clerk,on occasion,has issued fictitious credit memorandums to his friend for goods supposedly returned (these returns did not exist).The most effective control for preventing this activity is to

Accepted Answer

A)  prenumber and account for all credit memorandums. 
B)  require receiving reports to support all credit memorandums before they are approved. 
C)  have the sales department independent of the accounts-receivable department. 
D)  mail monthly statements to the customer. 
A)  prenumber and account for all credit memorandums. 
B)  require receiving reports to support all credit memorandums before they are approved. 
C)  have the sales department independent of the accounts-receivable department. 
D)  mail monthly statements to the customer.

Question 8

Information about the internal control system can be gathered by completing an __________________________________________.
Question also found in study guide

Accepted Answer

internal c

Question 9

The accountants who record cash receipts and credits to customer accounts should not handle the cash.
Question also found in study guide

Accepted Answer

A) True 
 B)False

Question 10

A price list master file contains the product unit prices that are used for billing customers.
Question also found in study guide

Accepted Answer

A) True 
 B)False

Question 11

In the revenue and collection cycle,the auditor checks the numerical sequence of shipping documents.This procedure is related to which of the following assertions?

Accepted Answer

A)  Existence. 
B)  Completeness. 
C)  Rights and obligations. 
D)  Valuation or allocation. 
A)  Existence. 
B)  Completeness. 
C)  Rights and obligations. 
D)  Valuation or allocation.

Question 12

_________________________________ of accounts receivable records implies the power to alter them directly or enter transactions to alter them.
Question also found in study guide

Accepted Answer

The answer of _________________________________ of accounts receivable records implies the...

Question 13

Confirmation of individual accounts receivable balances directly with debtors will,of itself,normally provide the strongest evidence concerning the

Accepted Answer

A)  collectability of the balances confirmed. 
B)  ownership of the balances confirmed. 
C)  existence of the balances confirmed. 
D)  internal control over balances confirmed. 
A)  collectability of the balances confirmed. 
B)  ownership of the balances confirmed. 
C)  existence of the balances confirmed. 
D)  internal control over balances confirmed.

Question 14

Which of the following controls is designed to meet the completeness assertion?

Accepted Answer

A)  Prenumbering invoices, shipping documents, and sales orders. 
B)  Sales orders are approved by the credit department prior to shipping goods. 
C)  The sale is to a customer on the approved customer list. 
D)  Sales are dated by the computer to ensure it is included in the proper period. 
A)  Prenumbering invoices, shipping documents, and sales orders. 
B)  Sales orders are approved by the credit department prior to shipping goods. 
C)  The sale is to a customer on the approved customer list. 
D)  Sales are dated by the computer to ensure it is included in the proper period.

Question 15

In the audit of accounts receivable,the most important emphasis should be on the

Accepted Answer

A)  completeness assertion. 
B)  existence assertion. 
C)  rights and obligations assertion. 
D)  presentation and disclosure assertion. 
A)  completeness assertion. 
B)  existence assertion. 
C)  rights and obligations assertion. 
D)  presentation and disclosure assertion.

Question 16

Assertions related to account balances are ________________________________,________________________________,_________________________________ ________________________________,_________________________________ and ________________________________.
Question also found in study guide

Accepted Answer

existence ; complete

Question 17

When an auditor decides to confirm accounts receivable balances rather than individual invoices,it most likely would be beneficial to include with the confirmations

Accepted Answer

A)  copies of the client's shipping documents that support the account balances. 
B)  lists of the customers' recent payments that the client has already recorded. 
C)  client-prepared statements of account that show the details of the account balances. 
D)  copies of the customers' purchase orders that support the account balances. 
A)  copies of the client's shipping documents that support the account balances. 
B)  lists of the customers' recent payments that the client has already recorded. 
C)  client-prepared statements of account that show the details of the account balances. 
D)  copies of the customers' purchase orders that support the account balances.

Question 18

An audit team is auditing sales transactions.One step is to vouch a sample of debit entries from the accounts receivable subsidiary ledger back to the supporting sales invoices.The purpose of this audit procedure is to establish that

Accepted Answer

A)  sales invoices represent bona fide sales. 
B)  all sales have been recorded. 
C)  all sales invoices have been properly posted to customer accounts. 
D)  entries in the accounts receivable subsidiary ledger were properly invoiced. 
A)  sales invoices represent bona fide sales. 
B)  all sales have been recorded. 
C)  all sales invoices have been properly posted to customer accounts. 
D)  entries in the accounts receivable subsidiary ledger were properly invoiced.

Question 19

Which of the following accounts is not normally part of the revenue and collection cycle?

Accepted Answer

A)  Sales. 
B)  Accounts Receivable. 
C)  Cash. 
D)  Purchases Returns and Allowances. 
A)  Sales. 
B)  Accounts Receivable. 
C)  Cash. 
D)  Purchases Returns and Allowances.

Question 20

Which of the following is the best reason for prenumbering in sequence such documents as sales orders,shipping documents,and sales invoices?

Accepted Answer

A)  Enables company personnel to determine the accuracy of each document. 
B)  Enables personnel to determine the proper period for recording of sales revenue and receivables. 
C)  Enables personnel to check the numerical sequence for missing documents and unrecorded transactions. 
D)  Enables personnel to determine the validity of recorded transactions. 
A)  Enables company personnel to determine the accuracy of each document. 
B)  Enables personnel to determine the proper period for recording of sales revenue and receivables. 
C)  Enables personnel to check the numerical sequence for missing documents and unrecorded transactions. 
D)  Enables personnel to determine the validity of recorded transactions.

A small business owner can best offset the lack of separation of duties by

The use of confirmations to test accounts receivable is considered a generally accepted audit procedure. Question also found in study guide

A computer generally cannot be used for scanning large files of accounts receivable for unusual credit balances. Question also found in study guide

What procedures should an auditor perform for a positive confirmation that is not returned by the client's customer?

Which of the following controls most likely would help ensure that all credit sales transactions of an entity are recorded?

The primary consideration when planning whether to send confirmations of accounts receivable before the balance sheet date is the

Information about the internal control system can be gathered by completing an __________________________________________. Question also found in study guide

The accountants who record cash receipts and credits to customer accounts should not handle the cash. Question also found in study guide

A price list master file contains the product unit prices that are used for billing customers. Question also found in study guide

In the revenue and collection cycle,the auditor checks the numerical sequence of shipping documents.This procedure is related to which of the following assertions?

_________________________________ of accounts receivable records implies the power to alter them directly or enter transactions to alter them. Question also found in study guide

Confirmation of individual accounts receivable balances directly with debtors will,of itself,normally provide the strongest evidence concerning the

Which of the following controls is designed to meet the completeness assertion?

In the audit of accounts receivable,the most important emphasis should be on the

Assertions related to account balances are ________________,,_ ,_ and ________________. Question also found in study guide

When an auditor decides to confirm accounts receivable balances rather than individual invoices,it most likely would be beneficial to include with the confirmations

An audit team is auditing sales transactions.One step is to vouch a sample of debit entries from the accounts receivable subsidiary ledger back to the supporting sales invoices.The purpose of this audit procedure is to establish that

Which of the following accounts is not normally part of the revenue and collection cycle?

Which of the following is the best reason for prenumbering in sequence such documents as sales orders,shipping documents,and sales invoices?

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Acquisition and Expenditure Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Audits governmental Audits and Fraud Examinations

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing and Information Technology

Filters

Exam 7: Revenue and Collection Cycle

A small business owner can best offset the lack of separation of duties by

The use of confirmations to test accounts receivable is considered a generally accepted audit procedure. Question also found in study guide

A computer generally cannot be used for scanning large files of accounts receivable for unusual credit balances. Question also found in study guide

What procedures should an auditor perform for a positive confirmation that is not returned by the client's customer?

Which of the following controls most likely would help ensure that all credit sales transactions of an entity are recorded?

The primary consideration when planning whether to send confirmations of accounts receivable before the balance sheet date is the

Information about the internal control system can be gathered by completing an __________________________________________. Question also found in study guide

The accountants who record cash receipts and credits to customer accounts should not handle the cash. Question also found in study guide

A price list master file contains the product unit prices that are used for billing customers. Question also found in study guide

In the revenue and collection cycle,the auditor checks the numerical sequence of shipping documents.This procedure is related to which of the following assertions?

_________________________________ of accounts receivable records implies the power to alter them directly or enter transactions to alter them. Question also found in study guide

Confirmation of individual accounts receivable balances directly with debtors will,of itself,normally provide the strongest evidence concerning the

Which of the following controls is designed to meet the completeness assertion?

In the audit of accounts receivable,the most important emphasis should be on the

Assertions related to account balances are ________________________________,________________________________,_________________________________ ________________________________,_________________________________ and ________________________________. Question also found in study guide

When an auditor decides to confirm accounts receivable balances rather than individual invoices,it most likely would be beneficial to include with the confirmations

An audit team is auditing sales transactions.One step is to vouch a sample of debit entries from the accounts receivable subsidiary ledger back to the supporting sales invoices.The purpose of this audit procedure is to establish that

Which of the following accounts is not normally part of the revenue and collection cycle?

Which of the following is the best reason for prenumbering in sequence such documents as sales orders,shipping documents,and sales invoices?

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Acquisition and Expenditure Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Audits governmental Audits and Fraud Examinations

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing and Information Technology

Filters

Assertions related to account balances are ________________,,_ ,_ and ________________. Question also found in study guide