Question 1

The purpose of tracing shipping documents to prenumbered sales invoices would be to provide evidence that:

Accepted Answer

A) Shipments to customers were properly invoiced. 
B) No duplicate shipments or billings occurred. 
C) Goods billed to customers were shipped. 
D) All prenumbered sales invoices were accounted for. 
A) Shipments to customers were properly invoiced. 
B) No duplicate shipments or billings occurred. 
C) Goods billed to customers were shipped. 
D) All prenumbered sales invoices were accounted for. A

Question 2

The custody responsibilities for cash receipts includes all of the following, except:

Accepted Answer

A) Updating accounts receivable records 
B) Opening mail 
C) Preparing a list of collections 
D) Handling receipts of currency and checks 
A) Updating accounts receivable records 
B) Opening mail 
C) Preparing a list of collections 
D) Handling receipts of currency and checks A

Question 3

Which of the following documents will be received by a customer after a sale?

Accepted Answer

A) Shipping log 
B) Pick list 
C) Monthly account statement 
D) Purchase order 
A) Shipping log 
B) Pick list 
C) Monthly account statement 
D) Purchase order C

Question 4

Which of the following is not a method of unethically inflating sales revenue?

Accepted Answer

A) Channel stuffing 
B) Holding sales open 
C) Premature recognition of contingent sales 
D) Promotional price discounts 
A) Channel stuffing 
B) Holding sales open 
C) Premature recognition of contingent sales 
D) Promotional price discounts

Question 5

The separation of the responsibility for the authorization of new customers from the custody of inventory will help to minimize the related risk of:

Accepted Answer

A) Invalid sales 
B) Fictitious customers 
C) Incorrect amounts 
D) Timing issues 
A) Invalid sales 
B) Fictitious customers 
C) Incorrect amounts 
D) Timing issues

Question 6

According to the textbook, after receiving a returned product and checking its condition, all of the following options are available to a company except:

Accepted Answer

A) Resell the product 
B) Record an allowance for doubtful accounts on the product 
C) Repair the product 
D) Dispose of the product 
A) Resell the product 
B) Record an allowance for doubtful accounts on the product 
C) Repair the product 
D) Dispose of the product

Question 7

In a large company, there are hundreds, possibly thousands, of sales transactions each day.The company needs to have in place, systems and processes to:

Accepted Answer

A) Capture the results of the sales transactions 
B) Record the proper and complete sales transactions 
C) Summarize and report the results of the transactions 
D) All of the above 
A) Capture the results of the sales transactions 
B) Record the proper and complete sales transactions 
C) Summarize and report the results of the transactions 
D) All of the above

Question 8

The following circumstances may indicate risks related to cash collections, except:

Accepted Answer

A) High volume of cash collections 
B) Centralized cash collections 
C) Lack of consistency in the volume or source of collections 
D) Presence of cash collections denominated in foreign currencies 
A) High volume of cash collections 
B) Centralized cash collections 
C) Lack of consistency in the volume or source of collections 
D) Presence of cash collections denominated in foreign currencies

Question 9

The recording responsibilities for cash receipts includes all of the following, except:

Accepted Answer

A) Maintaining a cash receipts journal 
B) Updating accounts receivable records for individual customers 
C) Posting subsidiary ledger totals to the general ledger 
D) Preparing bank deposits 
A) Maintaining a cash receipts journal 
B) Updating accounts receivable records for individual customers 
C) Posting subsidiary ledger totals to the general ledger 
D) Preparing bank deposits

Question 10

The use of electronic data interchange (EDI) to conduct sales electronically has both risks and benefits.Which of the following is a benefit of EDI, rather than a risk?

Accepted Answer

A) Incomplete audit trail 
B) Repudiation of sales transactions 
C) Unauthorized access 
D) Shorter inventory cycle time 
A) Incomplete audit trail 
B) Repudiation of sales transactions 
C) Unauthorized access 
D) Shorter inventory cycle time

Question 11

Features that assist management and accountants, as the result of the point-of-sale systems, include all of the following, except:

Accepted Answer

A) Bar code scanning eliminates the need to manually enter product codes, quantities, or prices. 
B) Real-time update of cash, sales, and inventory records allows for immediate analysis of sales trends, inventory needs, and cash on hand. 
C) List prices can be changed by the check-out clerks to take advantage of any price changes. 
D) Credit card authorization during the sale saves time and helps prevent credit card fraud. 
A) Bar code scanning eliminates the need to manually enter product codes, quantities, or prices. 
B) Real-time update of cash, sales, and inventory records allows for immediate analysis of sales trends, inventory needs, and cash on hand. 
C) List prices can be changed by the check-out clerks to take advantage of any price changes. 
D) Credit card authorization during the sale saves time and helps prevent credit card fraud.

Question 12

Application controls in an IT system that processed sales transactions would include:

Accepted Answer

A) Availability 
B) Accuracy and completeness 
C) Security 
D) Processing integrity 
A) Availability 
B) Accuracy and completeness 
C) Security 
D) Processing integrity

Question 13

All of the following indicate a high level of risk associated with sales returns, EXCEPT:

Accepted Answer

A) There is a high volume of credit memo activity. 
B) The company depends on a single customer or very few key customers. 
C) Transactions may be recorded in the wrong amount. 
D) Returns are received by consignees or under other arrangements not directly controlled by the company. 
A) There is a high volume of credit memo activity. 
B) The company depends on a single customer or very few key customers. 
C) Transactions may be recorded in the wrong amount. 
D) Returns are received by consignees or under other arrangements not directly controlled by the company.

Question 14

A ________ is prepared by warehouse personnel and lists all items included in a shipment.

Accepted Answer

A) Bill of lading 
B) Packing slip 
C) Shipping log 
D) Pick list 
A) Bill of lading 
B) Packing slip 
C) Shipping log 
D) Pick list

Question 15

For each transaction cycle and each type of transaction, there are internal controls that help to minimize certain risk to the company.Using the terminology and framework developed in the text, describe the following for the cash receipts cycle.

Accepted Answer

See Exhibi

Question 16

The Point-of-sales (POS) systems capture all relevant sales data at the point of sale - the cash register.The data that is captured includes all of the following, except:

Accepted Answer

A) Prices are determined by accessing inventory and price list data. 
B) Sales revenue is recorded. 
C) Ordering for low-inventory items 
D) Inventory values are updated. 
A) Prices are determined by accessing inventory and price list data. 
B) Sales revenue is recorded. 
C) Ordering for low-inventory items 
D) Inventory values are updated.

Question 17

The business processes that are common in company-to-company sales business are divided into three groups.Which of the following is not one of those groups?

Accepted Answer

A) Sales processes, including ordering, delivery, and billing 
B) Purchase of inventory, including ordering, delivery, and billing 
C) Sales returns processes 
D) Cash collection processes 
A) Sales processes, including ordering, delivery, and billing 
B) Purchase of inventory, including ordering, delivery, and billing 
C) Sales returns processes 
D) Cash collection processes

Question 18

The risks that may affect the revenue and cash collection processes include all of the following, except:

Accepted Answer

A) Transactions recorded by the wrong company 
B) Valid transactions may have been omitted from the records. 
C) Transactions may not have been recorded in a timely manner. 
D) Recorded transactions may not be valid or complete. 
A) Transactions recorded by the wrong company 
B) Valid transactions may have been omitted from the records. 
C) Transactions may not have been recorded in a timely manner. 
D) Recorded transactions may not be valid or complete.

Question 19

Examples of characteristics that indicate a company may be more risky with respect to the revenue process include all of the following, except:

Accepted Answer

A) Changes in sales prices or customers are infrequent. 
B) The pricing structure is complex or is based on estimates. 
C) There is a large volume of transactions is carried out. 
D) The company depends on a single or on very few customers. 
A) Changes in sales prices or customers are infrequent. 
B) The pricing structure is complex or is based on estimates. 
C) There is a large volume of transactions is carried out. 
D) The company depends on a single or on very few customers.

Question 20

Which of the following displays the correct order of operations within the sales process?

Accepted Answer

A) Verify prices, prepare sales order, verify credit limit, verify item is in stock 
B) Verify prices, verify credit limit, prepare sales order, verify item is in stock 
C) Verify prices, verify credit limit, verify item is in stock, prepare sales order 
D) Verify item is in stock, verify prices, verify credit limit, prepare sales order 
A) Verify prices, prepare sales order, verify credit limit, verify item is in stock 
B) Verify prices, verify credit limit, prepare sales order, verify item is in stock 
C) Verify prices, verify credit limit, verify item is in stock, prepare sales order 
D) Verify item is in stock, verify prices, verify credit limit, prepare sales order

The purpose of tracing shipping documents to prenumbered sales invoices would be to provide evidence that:

The custody responsibilities for cash receipts includes all of the following, except:

Which of the following documents will be received by a customer after a sale?

Which of the following is not a method of unethically inflating sales revenue?

The separation of the responsibility for the authorization of new customers from the custody of inventory will help to minimize the related risk of:

According to the textbook, after receiving a returned product and checking its condition, all of the following options are available to a company except:

In a large company, there are hundreds, possibly thousands, of sales transactions each day.The company needs to have in place, systems and processes to:

The following circumstances may indicate risks related to cash collections, except:

The recording responsibilities for cash receipts includes all of the following, except:

The use of electronic data interchange (EDI) to conduct sales electronically has both risks and benefits.Which of the following is a benefit of EDI, rather than a risk?

Features that assist management and accountants, as the result of the point-of-sale systems, include all of the following, except:

Application controls in an IT system that processed sales transactions would include:

All of the following indicate a high level of risk associated with sales returns, EXCEPT:

A ________ is prepared by warehouse personnel and lists all items included in a shipment.

For each transaction cycle and each type of transaction, there are internal controls that help to minimize certain risk to the company.Using the terminology and framework developed in the text, describe the following for the cash receipts cycle.

The Point-of-sales (POS) systems capture all relevant sales data at the point of sale - the cash register.The data that is captured includes all of the following, except:

The business processes that are common in company-to-company sales business are divided into three groups.Which of the following is not one of those groups?

The risks that may affect the revenue and cash collection processes include all of the following, except:

Examples of characteristics that indicate a company may be more risky with respect to the revenue process include all of the following, except:

Which of the following displays the correct order of operations within the sales process?

Introduction to AIS

Foundational Concepts of the AIS

Fraud, Ethics, and Internal Control

Internal Controls and Risks in IT Systems

IT Governance

Enterprise Resource Planning ERP Systems

Auditing Information Technology-Based Processes

Expenditures Processes and Controlspurchases

Expenditures Processes and Controlspayroll and Fixed Assets

Conversion Processes and Controls

Administrative Processes and Controls

Data and Databases

E-Commerce and E-Business

Filters

Exam 8: Revenue and Cash Collection Processes and Controls

The purpose of tracing shipping documents to prenumbered sales invoices would be to provide evidence that:

The custody responsibilities for cash receipts includes all of the following, except:

Which of the following documents will be received by a customer after a sale?

Which of the following is not a method of unethically inflating sales revenue?

The separation of the responsibility for the authorization of new customers from the custody of inventory will help to minimize the related risk of:

According to the textbook, after receiving a returned product and checking its condition, all of the following options are available to a company except:

In a large company, there are hundreds, possibly thousands, of sales transactions each day.The company needs to have in place, systems and processes to:

The following circumstances may indicate risks related to cash collections, except:

The recording responsibilities for cash receipts includes all of the following, except:

The use of electronic data interchange (EDI) to conduct sales electronically has both risks and benefits.Which of the following is a benefit of EDI, rather than a risk?

Features that assist management and accountants, as the result of the point-of-sale systems, include all of the following, except:

Application controls in an IT system that processed sales transactions would include:

All of the following indicate a high level of risk associated with sales returns, EXCEPT:

A ________ is prepared by warehouse personnel and lists all items included in a shipment.

For each transaction cycle and each type of transaction, there are internal controls that help to minimize certain risk to the company.Using the terminology and framework developed in the text, describe the following for the cash receipts cycle.

The Point-of-sales (POS) systems capture all relevant sales data at the point of sale - the cash register.The data that is captured includes all of the following, except:

The business processes that are common in company-to-company sales business are divided into three groups.Which of the following is not one of those groups?

The risks that may affect the revenue and cash collection processes include all of the following, except:

Examples of characteristics that indicate a company may be more risky with respect to the revenue process include all of the following, except:

Which of the following displays the correct order of operations within the sales process?

Introduction to AIS

Foundational Concepts of the AIS

Fraud, Ethics, and Internal Control

Internal Controls and Risks in IT Systems

IT Governance

Enterprise Resource Planning ERP Systems

Auditing Information Technology-Based Processes

Expenditures Processes and Controlspurchases

Expenditures Processes and Controlspayroll and Fixed Assets

Conversion Processes and Controls

Administrative Processes and Controls

Data and Databases

E-Commerce and E-Business

Filters