Question 1

The auditor traces items from the journals back to the source documents in order to satisfy the

Accepted Answer

A) occurrence objective. 
B) completeness objective. 
C) ownership objective. 
D) valuation objective. 
A) occurrence objective. 
B) completeness objective. 
C) ownership objective. 
D) valuation objective.

Question 2

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

Accepted Answer

A) send account confirmations. 
B) scan the aged trial balance for names of officers and directors. 
C) perform analysis of receivables turnover. 
D) scan the receivables sub-ledger for credit balances. 
A) send account confirmations. 
B) scan the aged trial balance for names of officers and directors. 
C) perform analysis of receivables turnover. 
D) scan the receivables sub-ledger for credit balances.

Question 3

One of the most important test of details of balances for accounts receivable is

Accepted Answer

A) recalculation of the aged receivables and uncollectible accounts. 
B) confirmations. 
C) tracing from shipping documents to journals to the accounts receivable ledger. 
D) tracing credit memos for returned merchandise to receiving room reports. 
A) recalculation of the aged receivables and uncollectible accounts. 
B) confirmations. 
C) tracing from shipping documents to journals to the accounts receivable ledger. 
D) tracing credit memos for returned merchandise to receiving room reports.

Question 4

Which of the following control procedures may prevent the failure to bill customers for some shipments?

Accepted Answer

A) Each shipment should be supported by a prenumbered sales invoice that is accounted for. 
B) Each sales order should be approved by authorized personnel. 
C) Sales journal entries should be reconciled to daily sales summaries. 
D) Each sales invoice should be supported by a shipping document. 
A) Each shipment should be supported by a prenumbered sales invoice that is accounted for. 
B) Each sales order should be approved by authorized personnel. 
C) Sales journal entries should be reconciled to daily sales summaries. 
D) Each sales invoice should be supported by a shipping document.

Question 5

A document that describes which accounts receivable accounts are to be written off and why is called a(n)

Accepted Answer

A) uncollectible account authorization form. 
B) journal entry authorization form. 
C) master file change form. 
D) sales returns and allowances journal. 
A) uncollectible account authorization form. 
B) journal entry authorization form. 
C) master file change form. 
D) sales returns and allowances journal.

Question 6

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

Accepted Answer

A) the extent to which planned detection risk is satisfied for each accounts receivable objective. 
B) whether assessed control risk for sales and cash receipts needs to be revised. 
C) if tests of details of balances need to be performed. 
D) whether positive or negative confirmations should be used for this engagement. 
A) the extent to which planned detection risk is satisfied for each accounts receivable objective. 
B) whether assessed control risk for sales and cash receipts needs to be revised. 
C) if tests of details of balances need to be performed. 
D) whether positive or negative confirmations should be used for this engagement.

Question 7

IFRS,ASPE,and ASNPO require that related party transactions be disclosed.Gregorio Limited has a materiality threshold of $50 000.Which of the following standards apply to the disclosure of related party transactions for Gregorio Limited?

Accepted Answer

A) Disclose all transactions that are greater than the current year's materiality. 
B) Disclose all related party transactions,even those below materiality. 
C) Disclose those related party transactions that relate to officers or directors of the corporation. 
D) Disclose those related party transactions that could affect the decisions of a user. 
A) Disclose all transactions that are greater than the current year's materiality. 
B) Disclose all related party transactions,even those below materiality. 
C) Disclose those related party transactions that relate to officers or directors of the corporation. 
D) Disclose those related party transactions that could affect the decisions of a user.

Question 8

The primary purpose of accounts receivable confirmation is to satisfy the

Accepted Answer

A) existence objective. 
B) existence and cutoff objectives. 
C) accuracy and cutoff objectives. 
D) existence,accuracy,and cutoff objectives. 
A) existence objective. 
B) existence and cutoff objectives. 
C) accuracy and cutoff objectives. 
D) existence,accuracy,and cutoff objectives.

Question 9

Which of the following documents and records is used to record the packages,weights,and sizes shipped using an external trucking company?

Accepted Answer

A) remittance advice 
B) shipping advice containing shipment tracking number 
C) returns receiving report 
D) bill of lading 
A) remittance advice 
B) shipping advice containing shipment tracking number 
C) returns receiving report 
D) bill of lading

Question 10

As part of audit planning,you have calculated gross margin for the last five years and compared gross margin to industry averages.Your client's gross margin has increased by about 5% in the current year,while the industry gross average has declined.One possible cause of this increased gross margin is

Accepted Answer

A) higher cost of goods sold. 
B) increased bad debt expenses. 
C) premature revenue recognition. 
D) fictitious expenses. 
A) higher cost of goods sold. 
B) increased bad debt expenses. 
C) premature revenue recognition. 
D) fictitious expenses.

Question 11

If accounts receivable accounts with credit balances are significant,they should be

Accepted Answer

A) written off. 
B) reclassified as accounts payable. 
C) corrected by making adjusting entries. 
D) moved to the debit side. 
A) written off. 
B) reclassified as accounts payable. 
C) corrected by making adjusting entries. 
D) moved to the debit side.

Question 12

There are three main types of revenue manipulations.Which of the following revenue manipulations affects the occurrence objective?

Accepted Answer

A) recording subsequent period sales as current period sales 
B) the use of "bill and holds" (goods are invoiced but not shipped) 
C) understatement of bad debts 
D) creation of fictitious sales that are misclassified as revenue 
A) recording subsequent period sales as current period sales 
B) the use of "bill and holds" (goods are invoiced but not shipped) 
C) understatement of bad debts 
D) creation of fictitious sales that are misclassified as revenue

Question 13

When a sample of customer accounts receivable is selected for the purpose of vouching debits for evidence of existence,the auditors will vouch them to which other items?

Accepted Answer

A) records of accounts receivable write-offs 
B) sales invoices with shipping documents and customer sales invoices 
C) cash remittance lists and bank deposit slips 
D) credit files and reports 
A) records of accounts receivable write-offs 
B) sales invoices with shipping documents and customer sales invoices 
C) cash remittance lists and bank deposit slips 
D) credit files and reports

Question 14

As part of audit planning,you have calculated gross margin for the last five years and compared gross margin to industry averages.Your client's gross margin has increased by about 5% in the current year,while the industry gross average has declined.One possible cause of this increased gross margin is

Accepted Answer

A) higher cost of goods sold. 
B) increased bad debt expenses. 
C) fictitious revenue. 
D) fictitious expenses. 
A) higher cost of goods sold. 
B) increased bad debt expenses. 
C) fictitious revenue. 
D) fictitious expenses.

Question 15

Frag Jones Company has a December year end with a tight reporting deadline,so the auditors confirmed the accounts receivable as of November 30 using positive confirmations.In addition to following up confirmation discrepancies,the auditor should

Accepted Answer

A) test December transactions. 
B) send negative confirmations as of the end of December. 
C) test November transactions. 
D) do cutoff testing for the month of October. 
A) test December transactions. 
B) send negative confirmations as of the end of December. 
C) test November transactions. 
D) do cutoff testing for the month of October.

Question 16

Analytical procedures are substantive tests and if the results of the analytical procedures are favorable they will reduce

Accepted Answer

A) the extent of tests of details of balances. 
B) the extent of tests of controls. 
C) the analytical procedures. 
D) all of the other tests. 
A) the extent of tests of details of balances. 
B) the extent of tests of controls. 
C) the analytical procedures. 
D) all of the other tests.

Question 17

Comparing bad debt expense as a percentage of gross sales with previous years will detect what kind of possible misstatement?

Accepted Answer

A) uncollectible accounts receivable not provided for 
B) overstatement of sales and accounts receivable 
C) understatement of sales and accounts receivable 
D) understatement of allowance for uncollectible accounts 
A) uncollectible accounts receivable not provided for 
B) overstatement of sales and accounts receivable 
C) understatement of sales and accounts receivable 
D) understatement of allowance for uncollectible accounts

Question 18

List the common fraud schemes relating to revenue.

Accepted Answer

The common fraud schemes relating to rev

Question 19

Tests of details of balances relate to which part of the Audit Risk Model?

Accepted Answer

A) control risk 
B) inherent risk 
C) substantive risk 
D) planned detection risk 
A) control risk 
B) inherent risk 
C) substantive risk 
D) planned detection risk

Question 20

Certain internal controls satisfy more than one objective.It is desirable to consider

Accepted Answer

A) each objective separately. 
B) the objectives together. 
C) the objectives that can be tested. 
D) only the controls that satisfy more than one objective. 
A) each objective separately. 
B) the objectives together. 
C) the objectives that can be tested. 
D) only the controls that satisfy more than one objective.

The auditor traces items from the journals back to the source documents in order to satisfy the

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

One of the most important test of details of balances for accounts receivable is

Which of the following control procedures may prevent the failure to bill customers for some shipments?

A document that describes which accounts receivable accounts are to be written off and why is called a(n)

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

IFRS,ASPE,and ASNPO require that related party transactions be disclosed.Gregorio Limited has a materiality threshold of $50 000.Which of the following standards apply to the disclosure of related party transactions for Gregorio Limited?

The primary purpose of accounts receivable confirmation is to satisfy the

Which of the following documents and records is used to record the packages,weights,and sizes shipped using an external trucking company?

If accounts receivable accounts with credit balances are significant,they should be

There are three main types of revenue manipulations.Which of the following revenue manipulations affects the occurrence objective?

When a sample of customer accounts receivable is selected for the purpose of vouching debits for evidence of existence,the auditors will vouch them to which other items?

Frag Jones Company has a December year end with a tight reporting deadline,so the auditors confirmed the accounts receivable as of November 30 using positive confirmations.In addition to following up confirmation discrepancies,the auditor should

Analytical procedures are substantive tests and if the results of the analytical procedures are favorable they will reduce

Comparing bad debt expense as a percentage of gross sales with previous years will detect what kind of possible misstatement?

List the common fraud schemes relating to revenue.

Tests of details of balances relate to which part of the Audit Risk Model?

Certain internal controls satisfy more than one objective.It is desirable to consider

The Demand for Audit and Other Assurance Services

The Public Accounting Profession and Audit Quality

Professional Ethics and Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Client Acceptance,Planning,and Materiality

Assessing the Risk of Material Misstatement

Internal Control and COSO Framework

Assessing Control Risk and Designing Test of Controls

Develop Risk Response: Audit Strategy and Audit Program

Audit Sampling Concepts

Audit of the Acquisition and Payment Cycle

Audit of the Inventory and Distribution Cycle

Audit of the Human Resources and Payroll Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash Balances

Completing the Audit

Audit Reports on Financial Statements

Other Assurance and Nonassurance Services

Filters

Exam 12: Audit of the Revenue Cycle

The auditor traces items from the journals back to the source documents in order to satisfy the

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

One of the most important test of details of balances for accounts receivable is

Which of the following control procedures may prevent the failure to bill customers for some shipments?

A document that describes which accounts receivable accounts are to be written off and why is called a(n)

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

IFRS,ASPE,and ASNPO require that related party transactions be disclosed.Gregorio Limited has a materiality threshold of $50 000.Which of the following standards apply to the disclosure of related party transactions for Gregorio Limited?

The primary purpose of accounts receivable confirmation is to satisfy the

Which of the following documents and records is used to record the packages,weights,and sizes shipped using an external trucking company?

If accounts receivable accounts with credit balances are significant,they should be

There are three main types of revenue manipulations.Which of the following revenue manipulations affects the occurrence objective?

When a sample of customer accounts receivable is selected for the purpose of vouching debits for evidence of existence,the auditors will vouch them to which other items?

Frag Jones Company has a December year end with a tight reporting deadline,so the auditors confirmed the accounts receivable as of November 30 using positive confirmations.In addition to following up confirmation discrepancies,the auditor should

Analytical procedures are substantive tests and if the results of the analytical procedures are favorable they will reduce

Comparing bad debt expense as a percentage of gross sales with previous years will detect what kind of possible misstatement?

List the common fraud schemes relating to revenue.

Tests of details of balances relate to which part of the Audit Risk Model?

Certain internal controls satisfy more than one objective.It is desirable to consider

The Demand for Audit and Other Assurance Services

The Public Accounting Profession and Audit Quality

Professional Ethics and Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Client Acceptance,Planning,and Materiality

Assessing the Risk of Material Misstatement

Internal Control and COSO Framework

Assessing Control Risk and Designing Test of Controls

Develop Risk Response: Audit Strategy and Audit Program

Audit Sampling Concepts

Audit of the Acquisition and Payment Cycle

Audit of the Inventory and Distribution Cycle

Audit of the Human Resources and Payroll Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash Balances

Completing the Audit

Audit Reports on Financial Statements

Other Assurance and Nonassurance Services

Filters