Question 1

To which of the following tests is the determination of FOB destination and FOB shipping point critical?

Accepted Answer

A) Sales cutoff test 
B) Details of balances 
C) Vouch revenue transactions 
D) Trace revenue transactions 
A) Sales cutoff test 
B) Details of balances 
C) Vouch revenue transactions 
D) Trace revenue transactions

Question 2

Which of the following help the fraudster sometimes solve the problem of having to continue the process of lapping?

Accepted Answer

A) Falsifying a sale adjustment to reduce the receivable 
B) Writing off part of a customer's balance through a journal entry 
C) Covering the shortage from a customer with funds from another customer 
D) Accounting for a payment as coming from two different customers 
A) Falsifying a sale adjustment to reduce the receivable 
B) Writing off part of a customer's balance through a journal entry 
C) Covering the shortage from a customer with funds from another customer 
D) Accounting for a payment as coming from two different customers

Question 3

The uncollectible accounts expense to net credit sales ratio is useful in evaluating the reasonableness of __________.

Accepted Answer

A) uncollectible accounts expense 
B) total revenues 
C) gross margins 
D) prior period's uncollectible accounts expense 
A) uncollectible accounts expense 
B) total revenues 
C) gross margins 
D) prior period's uncollectible accounts expense

Question 4

The starting point for every audit test is _______.

Accepted Answer

A) agreeing fee schedules and compensation 
B) contact with the predecessor auditor 
C) is obtaining an understanding of the business and industry 
D) agreement with the client as to what kind of audit opinion they can expect 
A) agreeing fee schedules and compensation 
B) contact with the predecessor auditor 
C) is obtaining an understanding of the business and industry 
D) agreement with the client as to what kind of audit opinion they can expect

Question 5

While examining internal control weaknesses, the auditor may need to change the timing of planned substantive tests related to an assertion from interim testing to testing ________ balances.

Accepted Answer

A) year-end 
B) end-of-quarter 
C) month-end 
D) None of these answer choices are correct. 
A) year-end 
B) end-of-quarter 
C) month-end 
D) None of these answer choices are correct.

Question 6

A credit sale should always include debits to accounts receivable and cost of goods sold, and credits to ________.

Accepted Answer

A) sales discounts and allowances 
B) sales and inventory 
C) sales and sales discounts 
D) sales discounts and inventory 
A) sales discounts and allowances 
B) sales and inventory 
C) sales and sales discounts 
D) sales discounts and inventory

Question 7

If a reasonable estimate of potential refunds cannot be made, _______.

Accepted Answer

A) the firm should simply disregard any expense and handle on a case-by-case basis 
B) revenue should not be recognized until the material uncertainty is resolved 
C) a portion of the revenue should recognized immediately upon sale 
D) no revenue recognition should occur during the life of the refund obligation 
A) the firm should simply disregard any expense and handle on a case-by-case basis 
B) revenue should not be recognized until the material uncertainty is resolved 
C) a portion of the revenue should recognized immediately upon sale 
D) no revenue recognition should occur during the life of the refund obligation

Question 8

What do over-the-counter receipts devices such as a cash register or point-of-sale terminal provide?

Accepted Answer

A) All of these answer choices are correct. 
B) Immediate visual display for the customer of the amount of the cash sale and the cash tendered 
C) An internal record of the transaction on a computer file or a tape locked inside the register 
D) Printed control totals of the day's receipts processed on the device 
A) All of these answer choices are correct. 
B) Immediate visual display for the customer of the amount of the cash sale and the cash tendered 
C) An internal record of the transaction on a computer file or a tape locked inside the register 
D) Printed control totals of the day's receipts processed on the device

Question 9

When shopping at Lucky Donuts for coffee and a bagel before heading into work, the cashier asked Susan Donahue if she wanted her receipt.Susan had paid cash, so she didn't really need her receipt.However, she noticed a sign on the register that said "please ask for a receipt".Why is it in the interest of the owner of Lucky Donuts to have the customer ask for a receipt?

Accepted Answer

The customer's expectation of a printed

Question 10

If a selling company changes the right of return near the end of the period to offer more generous terms, the company should not be able to recognize revenue until ________.(Select two conditions.)

Accepted Answer

A) material uncertainties are resolved 
B) subsequent cash collections are assured 
C) all goods that the company has billed are shipped 
D) the company forfeits all rights associated with the goods 
A) material uncertainties are resolved 
B) subsequent cash collections are assured 
C) all goods that the company has billed are shipped 
D) the company forfeits all rights associated with the goods

Question 11

After evaluating inherent risk and control risk, the auditor ________.

Accepted Answer

A) is in a position to begin the audit work 
B) can conclude the audit and issue an audit opinion 
C) should confirm with management to ensure the auditors findings are agreed with 
D) is in a position to evaluate fraud risk 
A) is in a position to begin the audit work 
B) can conclude the audit and issue an audit opinion 
C) should confirm with management to ensure the auditors findings are agreed with 
D) is in a position to evaluate fraud risk

Question 12

Segregation of duties ________.

Accepted Answer

A) should always be considered an important internal control 
B) should be of primary concern to larger, more complex companies 
C) should be instituted by the auditor 
D) refers to ensuring employees take on as many tasks as possible, to save labor costs 
A) should always be considered an important internal control 
B) should be of primary concern to larger, more complex companies 
C) should be instituted by the auditor 
D) refers to ensuring employees take on as many tasks as possible, to save labor costs

Question 13

What is a credit memo?

Accepted Answer

A) A form stating the particulars of a credit to accounts receivable, including the specific items returned, prices, and amount credited to a customer's account 
B) A document used to record adjustments such as a provision for bad debt expense or an accounts receivable write-off in the general ledger 
C) A report prepared on the receipt of goods from customers showing the kinds and quantities of goods received 
D) A form showing the description, quantity, and other data pertaining to goods the customer is authorized to return 
A) A form stating the particulars of a credit to accounts receivable, including the specific items returned, prices, and amount credited to a customer's account 
B) A document used to record adjustments such as a provision for bad debt expense or an accounts receivable write-off in the general ledger 
C) A report prepared on the receipt of goods from customers showing the kinds and quantities of goods received 
D) A form showing the description, quantity, and other data pertaining to goods the customer is authorized to return

Question 14

Recognizing revenues without shipping would lead to ________ gross margins and _______ accounts receivable turnover in days.

Accepted Answer

A) increased; low 
B) decreased; low 
C) increased; high 
D) decreased; high 
A) increased; low 
B) decreased; low 
C) increased; high 
D) decreased; high

Question 15

When no response has been received after the second or third positive confirmation request to a customer, ________.

Accepted Answer

A) alternative procedures should ordinarily be performed 
B) the auditor should assume that no news is good news 
C) the auditor should simply confirm with the client instead 
D) the auditor should make inquiries of the client's legal counsel 
A) alternative procedures should ordinarily be performed 
B) the auditor should assume that no news is good news 
C) the auditor should simply confirm with the client instead 
D) the auditor should make inquiries of the client's legal counsel

Question 16

What is a remittance advice?

Accepted Answer

A) A document prepared by the bank showing the details of electronic funds transfers received by the bank from customers 
B) A receipt from the bank showing the total amount deposited to the client's account at the bank 
C) A document received from the customer showing the details of payments made by the customer 
D) A daily report showing cash recorded in the cash receipts journal identifying customers making payments on account and the amounts received 
A) A document prepared by the bank showing the details of electronic funds transfers received by the bank from customers 
B) A receipt from the bank showing the total amount deposited to the client's account at the bank 
C) A document received from the customer showing the details of payments made by the customer 
D) A daily report showing cash recorded in the cash receipts journal identifying customers making payments on account and the amounts received

Question 17

Which of the following control activities are useful in reducing the risk of fraud?

Accepted Answer

A) All sales returns should be authorized by sales management 
B) Goods should be received only with a proper sales return authorization 
C) An independent count of goods returned should be recorded on a receiving report 
D) The duties of authorizing sales returns and receiving goods should be combined 
A) All sales returns should be authorized by sales management 
B) Goods should be received only with a proper sales return authorization 
C) An independent count of goods returned should be recorded on a receiving report 
D) The duties of authorizing sales returns and receiving goods should be combined

Question 18

Which of the following actions may lead to sales adjustment transactions being used to conceal thefts of cash received from customers?

Accepted Answer

A) Overstating discounts 
B) Recording fictitious sales returns 
C) Writing off customers' balances as uncollectible 
D) Misclassifying receivables as current or noncurrent 
A) Overstating discounts 
B) Recording fictitious sales returns 
C) Writing off customers' balances as uncollectible 
D) Misclassifying receivables as current or noncurrent

Question 19

What risks are eliminated through the use of electronic funds transfers directly to bank or establishing a lockbox arrangement with the bank?

Accepted Answer

A) Mail receipts lost or misappropriated after receipt 
B) Cash not deposited intact daily 
C) Inappropriate cash discounts taken by customers 
A) Mail receipts lost or misappropriated after receipt 
B) Cash not deposited intact daily 
C) Inappropriate cash discounts taken by customers

Question 20

If discounts are given for early payment, _______.

Accepted Answer

A) sales discounts are recorded when recording the cash receipt and reducing a customer's receivable 
B) the customer's account payable balance should be decreased accordingly 
C) the company should credit the Sales Discount account 
D) an increase in equity will result from a customer taking the discount 
A) sales discounts are recorded when recording the cash receipt and reducing a customer's receivable 
B) the customer's account payable balance should be decreased accordingly 
C) the company should credit the Sales Discount account 
D) an increase in equity will result from a customer taking the discount

To which of the following tests is the determination of FOB destination and FOB shipping point critical?

Which of the following help the fraudster sometimes solve the problem of having to continue the process of lapping?

The uncollectible accounts expense to net credit sales ratio is useful in evaluating the reasonableness of __________.

The starting point for every audit test is _______.

While examining internal control weaknesses, the auditor may need to change the timing of planned substantive tests related to an assertion from interim testing to testing ________ balances.

A credit sale should always include debits to accounts receivable and cost of goods sold, and credits to ________.

If a reasonable estimate of potential refunds cannot be made, _______.

What do over-the-counter receipts devices such as a cash register or point-of-sale terminal provide?

If a selling company changes the right of return near the end of the period to offer more generous terms, the company should not be able to recognize revenue until ________.(Select two conditions.)

After evaluating inherent risk and control risk, the auditor ________.

Segregation of duties ________.

What is a credit memo?

Recognizing revenues without shipping would lead to __ gross margins and _ accounts receivable turnover in days.

When no response has been received after the second or third positive confirmation request to a customer, ________.

What is a remittance advice?

Which of the following control activities are useful in reducing the risk of fraud?

Which of the following actions may lead to sales adjustment transactions being used to conceal thefts of cash received from customers?

What risks are eliminated through the use of electronic funds transfers directly to bank or establishing a lockbox arrangement with the bank?

If discounts are given for early payment, _______.

Introduction and Overview of Audit and Assurance

Professionalism, Ethics and Legal Liability

Risk Assessment Part Iaudit Risk and Audit Strategy

Risk Assessment Part Iiunderstanding the Client

Audit Evidence

Understanding of the Clients System of Internal Controls

Data Analyticsoverview and Application

Risk Responseperforming Tests of Controls

Risk Responseperforming Substantive Procedures

Risk Responseaudit Sampling for Substantive Testing

Auditing the Purchases Cycle and Payroll Cycle

Auditing Cash, Inventory, Investing and Financing Activities

Completing the Audit

Reporting on the Audit

Filters

Exam 11: Auditing the Revenue Cycle

To which of the following tests is the determination of FOB destination and FOB shipping point critical?

Which of the following help the fraudster sometimes solve the problem of having to continue the process of lapping?

The uncollectible accounts expense to net credit sales ratio is useful in evaluating the reasonableness of __________.

The starting point for every audit test is _______.

While examining internal control weaknesses, the auditor may need to change the timing of planned substantive tests related to an assertion from interim testing to testing ________ balances.

A credit sale should always include debits to accounts receivable and cost of goods sold, and credits to ________.

If a reasonable estimate of potential refunds cannot be made, _______.

What do over-the-counter receipts devices such as a cash register or point-of-sale terminal provide?

If a selling company changes the right of return near the end of the period to offer more generous terms, the company should not be able to recognize revenue until ________.(Select two conditions.)

After evaluating inherent risk and control risk, the auditor ________.

Segregation of duties ________.

What is a credit memo?

Recognizing revenues without shipping would lead to ________ gross margins and _______ accounts receivable turnover in days.

When no response has been received after the second or third positive confirmation request to a customer, ________.

What is a remittance advice?

Which of the following control activities are useful in reducing the risk of fraud?

Which of the following actions may lead to sales adjustment transactions being used to conceal thefts of cash received from customers?

What risks are eliminated through the use of electronic funds transfers directly to bank or establishing a lockbox arrangement with the bank?

If discounts are given for early payment, _______.

Introduction and Overview of Audit and Assurance

Professionalism, Ethics and Legal Liability

Risk Assessment Part Iaudit Risk and Audit Strategy

Risk Assessment Part Iiunderstanding the Client

Audit Evidence

Understanding of the Clients System of Internal Controls

Data Analyticsoverview and Application

Risk Responseperforming Tests of Controls

Risk Responseperforming Substantive Procedures

Risk Responseaudit Sampling for Substantive Testing

Auditing the Purchases Cycle and Payroll Cycle

Auditing Cash, Inventory, Investing and Financing Activities

Completing the Audit

Reporting on the Audit

Filters

Recognizing revenues without shipping would lead to __ gross margins and _ accounts receivable turnover in days.