Question 1

An effective procedure to test for unbilled shipments is to trace from the

Accepted Answer

A) sales history file to the shipping documents. 
B) shipping documents to the sales history file. 
C) sales history file to the accounts receivable ledger. 
D) sales history file to the general ledger sales account. 
A) sales history file to the shipping documents. 
B) shipping documents to the sales history file. 
C) sales history file to the accounts receivable ledger. 
D) sales history file to the general ledger sales account.

Question 2

To determine that sales are accurately charged,the unit prices on the duplicate sales invoices are normally compared with

Accepted Answer

A) the original invoices. 
B) the amounts recorded in the sales journal for that transaction. 
C) the amounts posted to the customer's account in the accounts receivable master file. 
D) an approved item master file. 
A) the original invoices. 
B) the amounts recorded in the sales journal for that transaction. 
C) the amounts posted to the customer's account in the accounts receivable master file. 
D) an approved item master file.

Question 3

Three presentation and disclosure audit objectives are not affected by assessed control risk for the sales transactions.These are

Accepted Answer

A) rights and obligations,valuation,and understandability. 
B) understandability,valuation,and occurrence. 
C) valuation,rights and obligations,and classification. 
D) classification,understandability,and rights and obligations. 
A) rights and obligations,valuation,and understandability. 
B) understandability,valuation,and occurrence. 
C) valuation,rights and obligations,and classification. 
D) classification,understandability,and rights and obligations.

Question 4

Tamra is performing a test of control consisting of looking at the numerical sequence of credit memos issued by the company.Tamra is performing a block test by looking for any missing number in the sequence.This test will provide evidence of

Accepted Answer

A) completeness. 
B) occurrence and completeness. 
C) occurrence and accuracy. 
D) accuracy and completeness. 
A) completeness. 
B) occurrence and completeness. 
C) occurrence and accuracy. 
D) accuracy and completeness.

Question 5

Celebra sold some goods to Frankfurt Corp.Frankfurt sent a cheque to Celebra to pay for the goods on December 24.Celebra received the cheque on January 4.At December 31,Celebra still showed an account receivable from Frankfurt while Frankfurt no longer had an account payable to Celebra.This situation represents a

Accepted Answer

A) cutoff error. 
B) timing difference. 
C) error in presentation. 
D) lack of communication between the two companies. 
A) cutoff error. 
B) timing difference. 
C) error in presentation. 
D) lack of communication between the two companies.

Question 6

Describe skimming.

Accepted Answer

Skimming is a common form of c

Question 7

Which of the following audit procedures is a dual-purpose test?

Accepted Answer

A) Conduct analytical review to determine the reasonableness of the bad debt allowance. 
B) Examine credit limit changes for authorization. 
C) Calculate the accuracy of the accounts receivable aging. 
D) Observe error message when incorrect customer number is entered. 
A) Conduct analytical review to determine the reasonableness of the bad debt allowance. 
B) Examine credit limit changes for authorization. 
C) Calculate the accuracy of the accounts receivable aging. 
D) Observe error message when incorrect customer number is entered.

Question 8

The emphasis for the audit of sales return and allowances is often placed on testing the existence of recorded transactions.However,the most important objective to consider is

Accepted Answer

A) cutoff. 
B) valuation. 
C) accuracy. 
D) completeness. 
A) cutoff. 
B) valuation. 
C) accuracy. 
D) completeness.

Question 9

To test for recorded sales for which there were no actual shipments,the auditor traces from the

Accepted Answer

A) bill of lading to the sales journal. 
B) sales journal to the shipping documents. 
C) sales journal to the accounts receivable subsidiary ledger. 
D) bill of lading to the supporting customer order and sales order. 
A) bill of lading to the sales journal. 
B) sales journal to the shipping documents. 
C) sales journal to the accounts receivable subsidiary ledger. 
D) bill of lading to the supporting customer order and sales order.

Question 10

A communication addressed to the debtor requesting him or her to confirm whether the balance as stated on the communication is correct or incorrect is a

Accepted Answer

A) legal confirmation. 
B) negative confirmation. 
C) positive confirmation. 
D) bank confirmation. 
A) legal confirmation. 
B) negative confirmation. 
C) positive confirmation. 
D) bank confirmation.

Question 11

For each control on which the auditor plans to rely to reduce assessed control risk,he or she must

Accepted Answer

A) design one or more tests of controls to verify effectiveness. 
B) report all weaknesses in the management letter. 
C) quantitatively determine the effect on sampling error. 
D) ensure that the test applies to several different transaction audit objectives. 
A) design one or more tests of controls to verify effectiveness. 
B) report all weaknesses in the management letter. 
C) quantitatively determine the effect on sampling error. 
D) ensure that the test applies to several different transaction audit objectives.

Question 12

Two accounts receivable balance-related audit objectives are not affected by assessed control risk for the sales and cash receipts classes of transactions.These objectives are

Accepted Answer

A) valuation;allocation. 
B) allocation;rights and obligations. 
C) valuation;rights and obligations. 
D) accuracy;existence. 
A) valuation;allocation. 
B) allocation;rights and obligations. 
C) valuation;rights and obligations. 
D) accuracy;existence.

Question 13

There are two important assumptions that underly the auditor's use of external confirmations.The first is that the person returning the confirmation is independent of the company and so will provide an unbiased response.The second is that

Accepted Answer

A) only authorized employees of the company have prepared the response. 
B) the person completing the response has carefully checked the data being confirmed. 
C) the respondent has not been coerced or bribed to respond to the confirmation. 
D) adequate controls exist at the client company to prevent unauthorized responses. 
A) only authorized employees of the company have prepared the response. 
B) the person completing the response has carefully checked the data being confirmed. 
C) the respondent has not been coerced or bribed to respond to the confirmation. 
D) adequate controls exist at the client company to prevent unauthorized responses.

Question 14

One of the key internal controls to prevent transactions in the sales and collection cycle to fictitious customers is to

Accepted Answer

A) have the bank reconciliation done by someone who is independent of the treasury function. 
B) account for the integrity of the numerical sequence of sales orders. 
C) compare customer numbers entered to the customer master file. 
D) include the sales price list of all products in the computer files. 
A) have the bank reconciliation done by someone who is independent of the treasury function. 
B) account for the integrity of the numerical sequence of sales orders. 
C) compare customer numbers entered to the customer master file. 
D) include the sales price list of all products in the computer files.

Question 15

If the internal controls for recording sales returns and allowances are evaluated as ineffective,

Accepted Answer

A) a larger sample is needed to verify cutoff. 
B) sampling is not appropriate. 
C) all sales returns must be traced to supporting documentation. 
D) all sales returns must be confirmed with the customer. 
A) a larger sample is needed to verify cutoff. 
B) sampling is not appropriate. 
C) all sales returns must be traced to supporting documentation. 
D) all sales returns must be confirmed with the customer.

Question 16

Which of the following presentation and disclosure-related audit objectives has a matching transaction-related audit objective,but not a matching balance-related audit objective?

Accepted Answer

A) accuracy 
B) classification 
C) occurrence 
D) completeness 
A) accuracy 
B) classification 
C) occurrence 
D) completeness

Question 17

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

Accepted Answer

A) tracing sales entries to shipping documents. 
B) tracing the credits in accounts receivable to bank deposits. 
C) tracing sales returns entries to credit memos issued and receiving room reports. 
D) sending external confirmations of customers' balances. 
A) tracing sales entries to shipping documents. 
B) tracing the credits in accounts receivable to bank deposits. 
C) tracing sales returns entries to credit memos issued and receiving room reports. 
D) sending external confirmations of customers' balances.

Question 18

As part of the audit testing,the auditor is conducting substantive analytical review over time (trend analysis)of bad debts to evaluate the quality of the accounts receivable.Which audit assertion is this associated with?

Accepted Answer

A) valuation 
B) classification 
C) rights and obligations 
D) occurrence 
A) valuation 
B) classification 
C) rights and obligations 
D) occurrence

An effective procedure to test for unbilled shipments is to trace from the

To determine that sales are accurately charged,the unit prices on the duplicate sales invoices are normally compared with

Three presentation and disclosure audit objectives are not affected by assessed control risk for the sales transactions.These are

Tamra is performing a test of control consisting of looking at the numerical sequence of credit memos issued by the company.Tamra is performing a block test by looking for any missing number in the sequence.This test will provide evidence of

Describe skimming.

Which of the following audit procedures is a dual-purpose test?

The emphasis for the audit of sales return and allowances is often placed on testing the existence of recorded transactions.However,the most important objective to consider is

To test for recorded sales for which there were no actual shipments,the auditor traces from the

A communication addressed to the debtor requesting him or her to confirm whether the balance as stated on the communication is correct or incorrect is a

For each control on which the auditor plans to rely to reduce assessed control risk,he or she must

Two accounts receivable balance-related audit objectives are not affected by assessed control risk for the sales and cash receipts classes of transactions.These objectives are

There are two important assumptions that underly the auditor's use of external confirmations.The first is that the person returning the confirmation is independent of the company and so will provide an unbiased response.The second is that

One of the key internal controls to prevent transactions in the sales and collection cycle to fictitious customers is to

If the internal controls for recording sales returns and allowances are evaluated as ineffective,

Which of the following presentation and disclosure-related audit objectives has a matching transaction-related audit objective,but not a matching balance-related audit objective?

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

As part of the audit testing,the auditor is conducting substantive analytical review over time (trend analysis)of bad debts to evaluate the quality of the accounts receivable.Which audit assertion is this associated with?

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

An effective procedure to test for unbilled shipments is to trace from the

To determine that sales are accurately charged,the unit prices on the duplicate sales invoices are normally compared with

Three presentation and disclosure audit objectives are not affected by assessed control risk for the sales transactions.These are

Tamra is performing a test of control consisting of looking at the numerical sequence of credit memos issued by the company.Tamra is performing a block test by looking for any missing number in the sequence.This test will provide evidence of

Describe skimming.

Which of the following audit procedures is a dual-purpose test?

The emphasis for the audit of sales return and allowances is often placed on testing the existence of recorded transactions.However,the most important objective to consider is

To test for recorded sales for which there were no actual shipments,the auditor traces from the

A communication addressed to the debtor requesting him or her to confirm whether the balance as stated on the communication is correct or incorrect is a

For each control on which the auditor plans to rely to reduce assessed control risk,he or she must

Two accounts receivable balance-related audit objectives are not affected by assessed control risk for the sales and cash receipts classes of transactions.These objectives are

There are two important assumptions that underly the auditor's use of external confirmations.The first is that the person returning the confirmation is independent of the company and so will provide an unbiased response.The second is that

One of the key internal controls to prevent transactions in the sales and collection cycle to fictitious customers is to

If the internal controls for recording sales returns and allowances are evaluated as ineffective,

Which of the following presentation and disclosure-related audit objectives has a matching transaction-related audit objective,but not a matching balance-related audit objective?

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

As part of the audit testing,the auditor is conducting substantive analytical review over time (trend analysis)of bad debts to evaluate the quality of the accounts receivable.Which audit assertion is this associated with?

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