Exam 9: Auditing the Revenue Cycle

Lithgow and Harris,CPAs are performing the audit of WildFlower Grocery Stores.Lithgow and Harris relates annual revenue by sales per square feet and sales per customer.What type of analysis is Lithgow and Harris most likely performing?

(Multiple Choice)

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Question 21

Edge and Gregg,LLP would most likely discover channel stuffing in the financial statements of a client through the use of trend analysis.

(True/False)

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Question 22

The revenue cycle considered by auditors includes the sales process but not collections.

(True/False)

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Question 23

Negative confirmations are considered to be more persuasive than positive confirmations.

(True/False)

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Question 24

The auditor traces recorded sales to invoices,sales orders and shipping documents in order to substantiate which assertion?

(Multiple Choice)

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Question 25

Fraud related to revenue recognition will most likely be identified by the auditor through which of the following independent situations?

(Multiple Choice)

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Question 26

The use of audit software makes the audit of the revenue cycle more effective,but not more efficient.

(True/False)

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Question 27

An appropriate mix of evidence for a low risk client could include 20% tests of details,40% analytics,and 40% tests of controls; an appropriate mix of evidence for a high risk client could include 60% tests of details,20% analytics,and 20% tests of controls.

(True/False)

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Question 28

Which of the following audit procedures does not address the rights,presentation and disclosure assertion for pledged,discounted,assigned,and related-party accounts receivable?

(Multiple Choice)

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Question 29

Testing cutoff involves procedures applied to sales transactions selected from those recorded immediately prior to period end and immediately following period end.

(True/False)

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Question 30

Which of the following is the best example of the control objective in the revenue cycle that all transactions are recorded accurately?

(Multiple Choice)

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Question 31

Estimation of the allowance for doubtful accounts is a simple management decision as it is determined as a percentage of sales.

(True/False)

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Question 32

Which of the following processes are included in the revenue cycle?

(Multiple Choice)

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Question 33

Monitoring of the revenue cycle may be accomplished partially through the use of exception reporting.

(True/False)

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Question 34

Analytical Procedures Explain ratio analysis as an analytical procedure used by auditor.Give examples of the ratios that auditor might want to compute for revenue cycle accounts.

(Essay)

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Question 35

An auditor's examination of the sales account using a cut-off test would most likely detect which of the following?

(Multiple Choice)

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Question 36

Accounts receivable presentation and disclosure Develop a list of substantive tests to test whether pledged,discounted,assigned,and related-party accounts receivable are properly disclosed.

(Essay)

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Question 37

Which of the following evidences delivery of product to customers sufficient for company recording as revenues?

(Multiple Choice)

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Question 38

An aging of accounts receivable is useful in estimating the reasonableness of the allowance for doubtful accounts.

(True/False)

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Question 39

In the audit of the revenue of Hiram Manufacturing Company,the auditors obtain a number of shipping documents shortly before year-end and immediately following the year under audit.The auditors compare the documents to the sales journal in order to test which of the following assertions?

(Multiple Choice)

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Question 40

Showing 21 - 40 of 116

Lithgow and Harris,CPAs are performing the audit of WildFlower Grocery Stores.Lithgow and Harris relates annual revenue by sales per square feet and sales per customer.What type of analysis is Lithgow and Harris most likely performing?

Edge and Gregg,LLP would most likely discover channel stuffing in the financial statements of a client through the use of trend analysis.

The revenue cycle considered by auditors includes the sales process but not collections.

Negative confirmations are considered to be more persuasive than positive confirmations.

The auditor traces recorded sales to invoices,sales orders and shipping documents in order to substantiate which assertion?

Fraud related to revenue recognition will most likely be identified by the auditor through which of the following independent situations?

The use of audit software makes the audit of the revenue cycle more effective,but not more efficient.

An appropriate mix of evidence for a low risk client could include 20% tests of details,40% analytics,and 40% tests of controls; an appropriate mix of evidence for a high risk client could include 60% tests of details,20% analytics,and 20% tests of controls.

Which of the following audit procedures does not address the rights,presentation and disclosure assertion for pledged,discounted,assigned,and related-party accounts receivable?

Testing cutoff involves procedures applied to sales transactions selected from those recorded immediately prior to period end and immediately following period end.

Which of the following is the best example of the control objective in the revenue cycle that all transactions are recorded accurately?

Estimation of the allowance for doubtful accounts is a simple management decision as it is determined as a percentage of sales.

Which of the following processes are included in the revenue cycle?

Monitoring of the revenue cycle may be accomplished partially through the use of exception reporting.

Analytical Procedures Explain ratio analysis as an analytical procedure used by auditor.Give examples of the ratios that auditor might want to compute for revenue cycle accounts.

An auditor's examination of the sales account using a cut-off test would most likely detect which of the following?

Accounts receivable presentation and disclosure Develop a list of substantive tests to test whether pledged,discounted,assigned,and related-party accounts receivable are properly disclosed.

Which of the following evidences delivery of product to customers sufficient for company recording as revenues?

An aging of accounts receivable is useful in estimating the reasonableness of the allowance for doubtful accounts.

In the audit of the revenue of Hiram Manufacturing Company,the auditors obtain a number of shipping documents shortly before year-end and immediately following the year under audit.The auditors compare the documents to the sales journal in order to test which of the following assertions?

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