Exam 11: The Revenues, receivables, and Receipts Process and Cash Account Balance

Which of the following controls is most likely to help ensure that all credit sales transactions are recorded?

The revenue and collection process encompasses all activities from receiving and processing the initial sales order through to collecting and depositing cash received from the customer.

Auditors ordinarily send a standard bank confirmation to all banks with which the client has done business during the year under audit,regardless of whether the client has closed its account.One reason for doing so is to ________.

Selecting a sample of debits from customer accounts receivable records and vouching them to supporting sales invoices is an audit procedure designed to obtain evidence about the control objective of ________.

What are the general internal control objectives for the revenue cycle?

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

Is the confirmation of cash and accounts receivable required according to Canadian Auditing Standards? Explain.

Canadian Auditing Standards require auditors to always presume fraud risk to be present in the audit of revenues.

An unrecorded cheque issued during the last week of the year would most likely be discovered by the auditor when the ________.

In choosing to use blank positive confirmations,the auditor should consider what possible trade-off will occur?

To gather evidence about transactions with related parties,an auditor would most likely ________.

Which of the following procedures would best lead to an understanding of the transaction flow in the revenue and collection cycle?

In the audit of cash,the auditor obtains a bank cutoff statement primarily to ________.

Tracing bills of lading to sales invoices provides evidence that ________.

The use of positive confirmations provides better evidence than the use of negative confirmations.

Cash receipts procedures should include steps for authorizing and recording discounts when the customer takes them.

In the audit of accounts receivable,negative confirmations are not normally used if ________.

Tracing the processing of a transaction from initiation to its recording in the records is called:

When the credit manager decides a customers' account is considered to be uncollectible,the decision should be reviewed by the controller to ________.

In the course of examining the cutoff bank statement for a client,an auditor is puzzled to discover that none of the cheques listed as outstanding on the year-end bank reconciliation has cleared the bank.This could be an indication that the client ________.