Exam 9: Auditing the Revenue Cycle

Internal control over the revenue cycle White Floyd,Inc.,a retail store,is concerned about the lack of control procedures over the recording of sales transactions.The company is concerned that the transactions might not be recorded accurately and valued properly in accordance with GAAP.Recommend control procedures to help ensure that transactions are recorded accurately and valued properly.

(Essay)

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Question 41

A company that ships a large quantity of its products from its manufacturing plant to a warehouse that it leases until the customer is ready for the product should record the delivery as revenue.

(True/False)

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Question 42

Which of the following must exist prior to the recognition of revenue by a company from the sale of a product?

(Multiple Choice)

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Question 43

Homer and Moe,PC are auditing the financial statements of Lyoncraft,Inc.and decide to confirm a sample of accounts receivable.This test is performed by Homer and Moe primarily to substantiate which of the following assertions?

(Multiple Choice)

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Question 44

A method used by companies to fraudulently inflate revenues includes which of the following?

(Multiple Choice)

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Question 45

Customer complaints noted in returned accounts receivable confirmations may be an indicator of fraud.

(True/False)

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Question 46

Requirements for confirming accounts receivable Confirmation of accounts receivable is required under GAAS unless certain conditions exist.Identify the conditions that will be present in an audit that does not confirm accounts receivable.

(Essay)

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Question 47

The significance of the bill of lading is to provide which of the following?

(Multiple Choice)

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Question 48

The auditor has determined that the control risk for the existence assertion is low; therefore the auditor may reduce the number of items tested on a substantive basis.

(True/False)

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Question 49

Calculating the turnover of receivables is often used in testing the sales cycle by auditors when performing which of the following?

(Multiple Choice)

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Question 50

Which of the following audit procedures does not address existence/occurrence for accounts receivables and sales?

(Multiple Choice)

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Question 51

Accounts receivable risks In the financial statements,there are many risks associated with an audit that must be considered.Identify and discuss five separate risks that may exist related to accounts receivable.

(Essay)

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Question 52

A method of testing for the completeness of sales is to test the sequence of sales invoices used during the period under audit.

(True/False)

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Question 53

Valid evidence obtained in an audit for testing the cutoff of gross sales includes receiving reports for returned merchandise.

(True/False)

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Question 54

According to auditing standards,accounts receivable confirmations are required to be used in which of the following situations?

(Multiple Choice)

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Question 55

Credit approval policies are implemented by organizations primarily to accomplish which of the following objectives?

(Multiple Choice)

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Question 56

The purpose of summarizing confirmation results is to list the extent of sales tested in relation to the response rate.

(True/False)

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Question 57

The auditor's determination that day's sales in accounts receivable increased from 44 days to 100 days would usually be found through the use of ratio analysis.

(True/False)

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Question 58

Current auditing standards do not require the confirmation of receivables if accounts receivable are not material.

(True/False)

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Question 59

Alternative procedures that would provide evidence of the existence of receivables would include which of the following?

(Multiple Choice)

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Question 60

Showing 41 - 60 of 116

A company that ships a large quantity of its products from its manufacturing plant to a warehouse that it leases until the customer is ready for the product should record the delivery as revenue.

Which of the following must exist prior to the recognition of revenue by a company from the sale of a product?

Homer and Moe,PC are auditing the financial statements of Lyoncraft,Inc.and decide to confirm a sample of accounts receivable.This test is performed by Homer and Moe primarily to substantiate which of the following assertions?

A method used by companies to fraudulently inflate revenues includes which of the following?

Customer complaints noted in returned accounts receivable confirmations may be an indicator of fraud.

Requirements for confirming accounts receivable Confirmation of accounts receivable is required under GAAS unless certain conditions exist.Identify the conditions that will be present in an audit that does not confirm accounts receivable.

The significance of the bill of lading is to provide which of the following?

The auditor has determined that the control risk for the existence assertion is low; therefore the auditor may reduce the number of items tested on a substantive basis.

Calculating the turnover of receivables is often used in testing the sales cycle by auditors when performing which of the following?

Which of the following audit procedures does not address existence/occurrence for accounts receivables and sales?

Accounts receivable risks In the financial statements,there are many risks associated with an audit that must be considered.Identify and discuss five separate risks that may exist related to accounts receivable.

A method of testing for the completeness of sales is to test the sequence of sales invoices used during the period under audit.

Valid evidence obtained in an audit for testing the cutoff of gross sales includes receiving reports for returned merchandise.

According to auditing standards,accounts receivable confirmations are required to be used in which of the following situations?

Credit approval policies are implemented by organizations primarily to accomplish which of the following objectives?

The purpose of summarizing confirmation results is to list the extent of sales tested in relation to the response rate.

The auditor's determination that day's sales in accounts receivable increased from 44 days to 100 days would usually be found through the use of ratio analysis.

Current auditing standards do not require the confirmation of receivables if accounts receivable are not material.

Alternative procedures that would provide evidence of the existence of receivables would include which of the following?

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