Question 1

Which of the following responses to an accounts receivable confirmation at December 31 would cause an audit team the most concern?

Accepted Answer

A) "This amount was paid on December 30th." 
B) "We received this shipment on January 2nd." 
C) "These goods were returned for credit on November 15th." 
D) "The balance does not reflect our sales discount for paying by January 5th." 
A) "This amount was paid on December 30th." 
B) "We received this shipment on January 2nd." 
C) "These goods were returned for credit on November 15th." 
D) "The balance does not reflect our sales discount for paying by January 5th."

Question 2

Two widely used confirmation forms to test accounts receivable are _________________________________ and _________________________________ confirmations.
Question also found in study guide

Accepted Answer

The answer of Two widely used confirmation forms to test...

Question 3

The ____________________________ confirmation form is used when individual balances are ____________________________ or accounts are in ______________________________.
Question also found in study guide

Accepted Answer

positive ;

Question 4

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 5

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 6

Which of the following procedures would an auditor most likely perform for year-end accounts receivable confirmations when the auditor did not receive replies to second requests?

Accepted Answer

A) Review the cash receipts journal for the month prior to the year-end. 
B) Intensify the study of the internal control structure concerning the revenue cycle. 
C) Increase the assessed level of detection risk for the existence assertion. 
D) Inspect the shipping records documenting the merchandise sold to the debtors. 
A) Review the cash receipts journal for the month prior to the year-end. 
B) Intensify the study of the internal control structure concerning the revenue cycle. 
C) Increase the assessed level of detection risk for the existence assertion. 
D) Inspect the shipping records documenting the merchandise sold to the debtors.

Question 7

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 8

Is the confirmation of cash and accounts receivable required according to auditing standards? Explain.

Accepted Answer

In general,the use of confirmations for

Question 9

Which of the following is an example of a control activity that satisfies the accuracy control objective for sales invoices?

Accepted Answer

A) Recorded sales in the sales journal are supported by invoices. 
B) Invoices,shipping documents,and sales orders are prenumbered and the numerical sequence is checked. 
C) Sales are recorded in the proper account. 
D) Invoice quantities are compared to shipment and customer order quantities. 
A) Recorded sales in the sales journal are supported by invoices. 
B) Invoices,shipping documents,and sales orders are prenumbered and the numerical sequence is checked. 
C) Sales are recorded in the proper account. 
D) Invoice quantities are compared to shipment and customer order quantities.

Question 10

Which of the following audit procedures is the most effective in testing sales for understatement?

Accepted Answer

A) Analyze the aged trial balance of recorded accounts receivable. 
B) Confirm recorded accounts receivable. 
C) Trace a sample of shipping documents to sales invoices recorded in the sales journal. 
D) Vouch a sample of recorded sales from the sales journal to shipping documents. 
A) Analyze the aged trial balance of recorded accounts receivable. 
B) Confirm recorded accounts receivable. 
C) Trace a sample of shipping documents to sales invoices recorded in the sales journal. 
D) Vouch a sample of recorded sales from the sales journal to shipping documents.

Question 11

An auditor should normally perform alternative procedures to substantiate the existence of accounts receivable when

Accepted Answer

A) no reply to a positive confirmation request is received. 
B) no reply to a negative confirmation request is received. 
C) collectability of the receivables is in doubt. 
D) pledging of the receivables is probable. 
A) no reply to a positive confirmation request is received. 
B) no reply to a negative confirmation request is received. 
C) collectability of the receivables is in doubt. 
D) pledging of the receivables is probable.

Question 12

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.

Which of the following responses to an accounts receivable confirmation at December 31 would cause an audit team the most concern?

Two widely used confirmation forms to test accounts receivable are _ and _ confirmations. Question also found in study guide

The confirmation form is used when individual balances are or accounts are in __. Question also found in study guide

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

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

Which of the following procedures would an auditor most likely perform for year-end accounts receivable confirmations when the auditor did not receive replies to second requests?

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

Is the confirmation of cash and accounts receivable required according to auditing standards? Explain.

Which of the following is an example of a control activity that satisfies the accuracy control objective for sales invoices?

Which of the following audit procedures is the most effective in testing sales for understatement?

An auditor should normally perform alternative procedures to substantiate the existence of accounts receivable when

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

Which of the following responses to an accounts receivable confirmation at December 31 would cause an audit team the most concern?

Two widely used confirmation forms to test accounts receivable are _________________________________ and _________________________________ confirmations. Question also found in study guide

The ____________________________ confirmation form is used when individual balances are ____________________________ or accounts are in ______________________________. Question also found in study guide

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

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

Which of the following procedures would an auditor most likely perform for year-end accounts receivable confirmations when the auditor did not receive replies to second requests?

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

Is the confirmation of cash and accounts receivable required according to auditing standards? Explain.

Which of the following is an example of a control activity that satisfies the accuracy control objective for sales invoices?

Which of the following audit procedures is the most effective in testing sales for understatement?

An auditor should normally perform alternative procedures to substantiate the existence of accounts receivable when

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

Two widely used confirmation forms to test accounts receivable are _ and _ confirmations. Question also found in study guide

The confirmation form is used when individual balances are or accounts are in __. Question also found in study guide