Exam 13: Completing Tests in the Sales and Collection Cycle: Accounts Receivable

The most commonly reported type(s) of difference in confirmation is/are:

The following audit procedure tests primarily which balance- related audit objective for accounts receivable: Review the minutes of the board of directors' meetings for any indication of pledged receivables.

Discuss the alternative procedures an auditor can perform to test the existence objective for accounts receivable when customers do not respond to confirmation requests.

Match five of the terms (a- k) with the descriptions provided below (1- 5): a. accounts receivable b. balance- related audit objectives c. alternative procedures d. blank confirmation form e. cutoff misstatements f. evidence planning worksheet g. negative confirmation h. positive confirmation i. realisable value of accounts receivable j. timing difference in an accounts receivable confirmation k. invoice confirmation. 1. The follow- up of a positive confirmation not returned by the debtor with the use of documentation evidence to determine whether the recorded receivable exists and is collectible. 2. A letter, addressed to the debtor, requesting that the recipient indicate directly on the letter whether the stated account balance is correct or incorrect and, if incorrect, by what amount. 3. Misstatements that take place as a result of current period transactions being recorded in a subsequent period, or subsequent period transactions being recorded in the current period. 4. A form used to help the auditor decide whether planned detection risk for tests of details of balances should be low, medium or high for each balance- related audit objective. 5. A letter, addressed to the debtor, requesting a response only if the recipient disagrees with the amount of the stated account balance.

When the client's rights to accounts receivable are limited, this can be detected by:

Design and perform tests of controls for the sales and collection cycle is part of which phase of the audit?

Which of the following is NOT a factor affecting sample size for confirming accounts receivable?

In the sales and collection cycle, the results of the tests of controls determine:

A listing of the balances in the accounts receivable master file at the balance sheet date, by total balance outstanding and by the time the component parts have been outstanding, is the:

Tests of details of balances focus on:

Discuss three tests auditors perform to satisfy themselves that a client's allowance for doubtful debts is adequate.

Most tests of accounts receivable and the allowance for uncollectible accounts are based on:

Set tolerable error for accounts receivable is part of which phase of the audit?

For sales, the existence transaction- related objective affects the existence balance- related objective for accounts receivable, but for cash receipts, the existence transaction- related objective affects the completeness balance- related objective for accounts receivable.

State the eight specific balance- related audit objectives as applied to accounts receivable.

Favourable results from analytical procedures reduce the extent to which the auditor needs to test details of balances.

The most important test of details of balances to determine the existence of recorded accounts receivable is:

The auditor should evaluate the qualitative nature of misstatements found in a sample of debtors' confirmations:

The most important test for the existence/occurrence objective for accounts receivable is:

Negative confirmations are less expensive and less reliable than positive confirmations.