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

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

Discuss the alternative procedures an auditor can perform to test the existence objective for accounts receivable when customers do not respond to confirmation requests.

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?

Negative confirmations are less expensive,and less reliable,than positive confirmations.

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

Confirmation of accounts receivable selected from the trial balance is the most common test of details of balances for the ________ of accounts receivable.

Generally accepted accounting principles require that revenue be reported net of sales returns and allowances:

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?

Auditors must maintain control of confirmations until they are returned from the customer.

The most reliable evidence from confirmations is obtained when they are sent:

Which of the following is a correct statement regarding analytical procedures?

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

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

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:

Describe how the auditor tests the accuracy objective for accounts receivable.

Each client misstatement in accounts receivable must be analyzed to determine whether it was consistent with the original assessed level of control risk.

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

One of the shortcomings in evaluating the allowance for uncollectible accounts by reviewing individual noncurrent balances on the aged trial balance is: I.it is difficult to compare the results of the current year with those of the previous year. II.current accounts are ignored in establishing the adequacy of the allowance.

Cutoff misstatements occur when: