Exam 11: Accounts Receivable, Notes Receivable, and Revenue

Tracing recorded sales transactions to the bills of lading provides evidence about the:

CPAs use negative accounts receivable confirmation requests more frequently than positive accounts receivable confirmation requests.

Which of the following is not a primary objective of the auditors in the examination of accounts receivable?

An auditor discovered that a client's accounts receivable turnover is substantially lower for the current year than for the prior year.This may indicate that

Which procedure would be of most assistance to an auditor discovering a large credit sale that has erroneously been recorded twice?

Which of the following would indicate the need to use positive accounts receivable confirmation requests?

Once a CPA has determined that accounts receivable have increased due to slow collections in a "tight money" environment,the CPA would be likely to:

Which of the following is not typically considered to be an alternate procedure for handling nonreplies to accounts receivable confirmation requests?

What type of error is the CPA most likely to discover when he/she examines all shipping reports dated in January of 20X1,shipped FOB shipping point,which were recorded in December of 20X0 as credit sales?

Analytical procedures are used by auditors to gain evidence about the adequacy of the allowance for uncollectible accounts.

Analytical procedures performed during an audit indicate that accounts receivable doubled since the end of the prior year.However,the allowance for doubtful accounts as a percentage of accounts receivable remained about the same.Which of the following client explanations would satisfy the auditor?

For effective internal control,the billing function should not be performed by the:

You were surprised to note that approximately 95% of returned positive accounts receivable confirmation requests indicated that the customers thought that they owed a larger balance than the amount that had been printed by your client on the confirmation.This might be explained by the fact that:

Your client performed the physical count of inventory as of November 30,one month prior to year-end.Subsequently,your client closed the sales journal on 12/29/XX,two days before year end,and reported those two days' credit sales in January of the next year.Assuming the client uses a perpetual inventory system which of the following is most likely to be overstated relating to the year XX financial statements?

Which of the following is consistent with effective internal control over sales transactions?

The confirmation process may be performed using a(n): Paper form electronic form A) Yes Yes B) Yes No C) No Yes D) No No

The individual looking for guidance on revenue recognition is most likely to appropriately review:

Material accounts receivable from related parties should be stated separately from other receivables.

Confirmation requests should contain a "business reply" envelope addressed to the auditors at the client's address.

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