Question 1

When auditing the revenue and collection cycle,auditors normally select balances to confirm from the

Accepted Answer

A)  sales journal. 
B)  accounts receivable listing. 
C)  general ledger. 
D)  cash receipts listing. 
A)  sales journal. 
B)  accounts receivable listing. 
C)  general ledger. 
D)  cash receipts listing.

Question 2

Another way to obtain information about the internal control system is to take a single example of a transaction and __________________________ the process from its initiation to its recording in the accounting records.
Question also found in study guide

Accepted Answer

The answer of Another way to obtain information about the...

Question 3

When a sample of customer accounts receivable is selected for vouching debits,auditors will vouch them to

Accepted Answer

A)  sales invoices with shipping documents. 
B)  records of accounts receivable write-offs. 
C)  cash remittance lists and bank deposit slips. 
D)  credit files and reports. 
A)  sales invoices with shipping documents. 
B)  records of accounts receivable write-offs. 
C)  cash remittance lists and bank deposit slips. 
D)  credit files and reports.

Question 4

Auditing the details of customer payments listed in bank deposits in comparison to details of customer payment postings can detect _________________________________.
Question also found in study guide

Accepted Answer

The answer of Auditing the details of customer payments listed...

Question 5

Confirmations yield evidence about existence and the gross valuation of a receivable balance.
Question also found in study guide

Accepted Answer

A) True 
 B)False

Question 6

The following question appeared on an internal control questionnaire for sales.Next to each of the question indicate the related assertion.

Accepted Answer

a.Completeness,b.Accuracy,c.Ac

Question 7

The auditor selects a sample of recorded sales invoices and vouches them to shipping documents.This procedure is related to which of the following assertions?

Accepted Answer

A)  Occurrence. 
B)  Completeness. 
C)  Accuracy. 
D)  Cutoff. 
A)  Occurrence. 
B)  Completeness. 
C)  Accuracy. 
D)  Cutoff.

Question 8

Confirmations of accounts receivable provide the most evidence for which of the following assertions?

Accepted Answer

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

Question 9

A comparison of checks listed on a sample of deposit slips to the detail of customer credits posted to customer accounts receivable can be an audit test for lapping.
Question also found in study guide

Accepted Answer

A) True 
 B)False

Question 10

Which of the following internal control activities most likely would deter lapping of collections from customers?

Accepted Answer

A)  Independent internal verification of dates of entry in the cash receipts journal with dates of daily cash summaries. 
B)  Authorization of write-offs of uncollectible accounts by a supervisor independent of credit approval. 
C)  Separation of duties between receiving cash and posting the accounts receivable ledger. 
D)  Supervisory comparison of the daily cash summary with the sum of the cash receipts journal entries. 
A)  Independent internal verification of dates of entry in the cash receipts journal with dates of daily cash summaries. 
B)  Authorization of write-offs of uncollectible accounts by a supervisor independent of credit approval. 
C)  Separation of duties between receiving cash and posting the accounts receivable ledger. 
D)  Supervisory comparison of the daily cash summary with the sum of the cash receipts journal entries.

Question 11

Cash receipts from sales on account have been misappropriated.Which of the following acts would conceal this defalcation and be least likely to be detected by an auditor?

Accepted Answer

A)  Understating the sales journal. 
B)  Overstating the accounts receivable control account. 
C)  Overstating the accounts receivable subsidiary ledger. 
D)  Understating the cash receipts journal. 
A)  Understating the sales journal. 
B)  Overstating the accounts receivable control account. 
C)  Overstating the accounts receivable subsidiary ledger. 
D)  Understating the cash receipts journal.

Question 12

The assertion that auditors will probably emphasize in the revenue and collection cycle is

Accepted Answer

A)  occurrence. 
B)  completeness. 
C)  accuracy. 
D)  classification. 
A)  occurrence. 
B)  completeness. 
C)  accuracy. 
D)  classification.

Question 13

Vouching debits from a sample selection of customers' accounts receivable records to supporting sales invoices is an audit procedure designed to obtain evidence about the assertion of

Accepted Answer

A)  occurrence. 
B)  completeness. 
C)  classification. 
D)  accuracy. 
A)  occurrence. 
B)  completeness. 
C)  classification. 
D)  accuracy.

Question 14

The confirmation of customers' accounts receivable rarely provides reliable evidence about the completeness assertion because

Accepted Answer

A)  many customers merely sign and return the confirmation without verifying its details. 
B)  recipients usually respond only if they disagree with the information on the request. 
C)  customers may not be inclined to report understatement errors in their accounts. 
D)  auditors typically select many accounts with low recorded balances to be confirmed. 
A)  many customers merely sign and return the confirmation without verifying its details. 
B)  recipients usually respond only if they disagree with the information on the request. 
C)  customers may not be inclined to report understatement errors in their accounts. 
D)  auditors typically select many accounts with low recorded balances to be confirmed.

Question 15

An auditor noted that client sales had increased 10 percent for the year.At the same time,cost of goods sold as a percentage of sales had decreased from 45 percent to 40 percent and year-end accounts receivable had increased by 8 percent.The auditor interviewed the sales manager who stated that the increase in sales without a corresponding increase in cost of goods sold was due to a price increase enacted by the company during the year.How would the auditor best test the sales manager's representation?

Accepted Answer

A)  Perform additional inquiries with sales personnel. 
B)  Obtain copies of all price lists in use during the year and vouch the prices to sales invoices. 
C)  Send confirmations asking customers about unit prices paid for product. 
D)  Vouch vender invoices to payments made after year-end. 
A)  Perform additional inquiries with sales personnel. 
B)  Obtain copies of all price lists in use during the year and vouch the prices to sales invoices. 
C)  Send confirmations asking customers about unit prices paid for product. 
D)  Vouch vender invoices to payments made after year-end.

Question 16

In tests of controls auditing,auditors need to define "deviations" in advance.Give seven examples of control compliance deviations related to a client's processing of credit sales transactions and the related assertion that was violated.

Accepted Answer

a.Occurrence.Fictitious sales are record

Question 17

Revenues are normally considered to have been earned when

Accepted Answer

A)  all possibility of return has expired. 
B)  the company has substantially accomplished what it must to be entitled to the benefits. 
C)  the cash is collected. 
D)  goods have been shipped. 
A)  all possibility of return has expired. 
B)  the company has substantially accomplished what it must to be entitled to the benefits. 
C)  the cash is collected. 
D)  goods have been shipped.

Question 18

The actions in tests of controls involve ________________________________,________________________________,________________________________,_________________________________ and ________________________________.
Question also found in study guide

Accepted Answer

vouching ; tracing ;

Question 19

A procedure to gather evidence on both account balances and controls is called a ______________________________________ procedure.
Question also found in study guide

Accepted Answer

The answer of A procedure to gather evidence on both...

Question 20

Which of the following statements is correct concerning the use of negative confirmation requests?

Accepted Answer

A)  Unreturned negative confirmation requests rarely provide significant explicit evidence. 
B)  Negative confirmation requests are effective when detection risk is low. 
C)  Unreturned negative confirmation requests indicate that alternative procedures are necessary. 
D)  Negative confirmation requests are effective when understatements of account balances are suspected. 
A)  Unreturned negative confirmation requests rarely provide significant explicit evidence. 
B)  Negative confirmation requests are effective when detection risk is low. 
C)  Unreturned negative confirmation requests indicate that alternative procedures are necessary. 
D)  Negative confirmation requests are effective when understatements of account balances are suspected.

When auditing the revenue and collection cycle,auditors normally select balances to confirm from the

Another way to obtain information about the internal control system is to take a single example of a transaction and __________________________ the process from its initiation to its recording in the accounting records. Question also found in study guide

When a sample of customer accounts receivable is selected for vouching debits,auditors will vouch them to

Auditing the details of customer payments listed in bank deposits in comparison to details of customer payment postings can detect _________________________________. Question also found in study guide

Confirmations yield evidence about existence and the gross valuation of a receivable balance. Question also found in study guide

The following question appeared on an internal control questionnaire for sales.Next to each of the question indicate the related assertion.

The auditor selects a sample of recorded sales invoices and vouches them to shipping documents.This procedure is related to which of the following assertions?

Confirmations of accounts receivable provide the most evidence for which of the following assertions?

A comparison of checks listed on a sample of deposit slips to the detail of customer credits posted to customer accounts receivable can be an audit test for lapping. Question also found in study guide

Which of the following internal control activities most likely would deter lapping of collections from customers?

Cash receipts from sales on account have been misappropriated.Which of the following acts would conceal this defalcation and be least likely to be detected by an auditor?

The assertion that auditors will probably emphasize in the revenue and collection cycle is

Vouching debits from a sample selection of customers' accounts receivable records to supporting sales invoices is an audit procedure designed to obtain evidence about the assertion of

The confirmation of customers' accounts receivable rarely provides reliable evidence about the completeness assertion because

In tests of controls auditing,auditors need to define "deviations" in advance.Give seven examples of control compliance deviations related to a client's processing of credit sales transactions and the related assertion that was violated.

Revenues are normally considered to have been earned when

The actions in tests of controls involve ________________,,,_ and ________________. Question also found in study guide

A procedure to gather evidence on both account balances and controls is called a ______________________________________ procedure. Question also found in study guide

Which of the following statements is correct concerning the use of negative confirmation requests?

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

When auditing the revenue and collection cycle,auditors normally select balances to confirm from the

Another way to obtain information about the internal control system is to take a single example of a transaction and __________________________ the process from its initiation to its recording in the accounting records. Question also found in study guide

When a sample of customer accounts receivable is selected for vouching debits,auditors will vouch them to

Auditing the details of customer payments listed in bank deposits in comparison to details of customer payment postings can detect _________________________________. Question also found in study guide

Confirmations yield evidence about existence and the gross valuation of a receivable balance. Question also found in study guide

The following question appeared on an internal control questionnaire for sales.Next to each of the question indicate the related assertion.

The auditor selects a sample of recorded sales invoices and vouches them to shipping documents.This procedure is related to which of the following assertions?

Confirmations of accounts receivable provide the most evidence for which of the following assertions?

A comparison of checks listed on a sample of deposit slips to the detail of customer credits posted to customer accounts receivable can be an audit test for lapping. Question also found in study guide

Which of the following internal control activities most likely would deter lapping of collections from customers?

Cash receipts from sales on account have been misappropriated.Which of the following acts would conceal this defalcation and be least likely to be detected by an auditor?

The assertion that auditors will probably emphasize in the revenue and collection cycle is

Vouching debits from a sample selection of customers' accounts receivable records to supporting sales invoices is an audit procedure designed to obtain evidence about the assertion of

The confirmation of customers' accounts receivable rarely provides reliable evidence about the completeness assertion because

In tests of controls auditing,auditors need to define "deviations" in advance.Give seven examples of control compliance deviations related to a client's processing of credit sales transactions and the related assertion that was violated.

Revenues are normally considered to have been earned when

The actions in tests of controls involve ________________________________,________________________________,________________________________,_________________________________ and ________________________________. Question also found in study guide

A procedure to gather evidence on both account balances and controls is called a ______________________________________ procedure. Question also found in study guide

Which of the following statements is correct concerning the use of negative confirmation requests?

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

The actions in tests of controls involve ________________,,,_ and ________________. Question also found in study guide