Question 1

Distinguish between a packing slip, shipping notice, and a bill of lading.

Accepted Answer

The packing slip travels with the goods to the customer, and it describes the contents on the order. Upon filling the order, the shipping department sends the shipping notice to the billing department to notify them that the order has been filled and shipped. The shipping notice contains additional information that the packing slip may not contain, such as shipment date, carrier and freight charges. The bill of lading is a formal contract between the seller and the transportation carrier; it shows legal ownership and responsibility for assets in transit.

Question 2

What are the three rules that ensure that no single employee or department processes a transaction in its entirety?

Accepted Answer

The three rules that ensure segregation of functions are:1. Transaction authorization should be separate from transaction processing 
2. Asset custody should be separate from asset record keeping.
3. The organization structure should be such that the perpetration of a fraud requires collusion between 2 or more individuals.

Question 3

At which point is supervision most critical in the cash receipts system?

Accepted Answer

A)  accounts receivable 
B)  general ledger 
C)  mail room 
D)  cash receipts 
A)  accounts receivable 
B)  general ledger 
C)  mail room 
D)  cash receipts C

Question 4

A credit sale is made to a customer, even though the customer's account is four months overdue. Describe a specific internal control procedure that would prevent this from happening.

Accepted Answer

perform a credit che

Question 5

The stock release document is prepared by the shipping department to provide evidence that the goods have been released to the customer.

Accepted Answer

A) True 
 B)False

Question 6

The reconciliation that occurs in the shipping department is intended to ensure that

Accepted Answer

A)  credit has been approved 
B)  the customer is billed for the exact quantity shipped 
C)  the goods shipped match the goods ordered 
D)  inventory records are reduced for the goods shipped 
A)  credit has been approved 
B)  the customer is billed for the exact quantity shipped 
C)  the goods shipped match the goods ordered 
D)  inventory records are reduced for the goods shipped

Question 7

The shipping notice

Accepted Answer

A)  is mailed to the customer 
B)  is a formal contract between the seller and the shipping company 
C)  is always prepared by the shipping clerk 
D)  informs the billing department of the quantities shipped 
A)  is mailed to the customer 
B)  is a formal contract between the seller and the shipping company 
C)  is always prepared by the shipping clerk 
D)  informs the billing department of the quantities shipped

Question 8

In a manual system, the billing department is responsible for recording the sale in the sales journal.

Accepted Answer

A) True 
 B)False

Question 9

With regard to segregation of duties, rule one is that transaction authorization and transaction processing should be separated. What does this require in the revenue cycle?

Accepted Answer

Within the revenue cycle, the credit dep

Question 10

Customers should be billed for back-orders when

Accepted Answer

A)  the customer purchase order is received 
B)  the backordered goods are shipped 
C)  the original goods are shipped 
D)  customers are not billed for backorders because a backorder is a lost sale 
A)  the customer purchase order is received 
B)  the backordered goods are shipped 
C)  the original goods are shipped 
D)  customers are not billed for backorders because a backorder is a lost sale

Question 11

What specific internal control procedure would prevent the shipping clerk from taking goods from the storeroom and sending them to someone who had not placed an order?

Accepted Answer

shipping clerk shoul

Question 12

In most large organizations, the journal voucher file has replaced the formal general journal.

Accepted Answer

A) True 
 B)False

Question 13

Internal controls for handling sales returns and allowances do not include

Accepted Answer

A)  computing bad debt expense using the percentage of credit sales 
B)  verifying that the goods have been returned 
C)  authorizing the credit memo by management 
D)  using the original sales invoice to prepare the sales returns slip 
A)  computing bad debt expense using the percentage of credit sales 
B)  verifying that the goods have been returned 
C)  authorizing the credit memo by management 
D)  using the original sales invoice to prepare the sales returns slip

Question 14

The purpose of the sales invoice is to

Accepted Answer

A)  record reduction of inventory 
B)  transfer goods from seller to shipper 
C)  bill the customer 
D)  select items from inventory for shipment 
A)  record reduction of inventory 
B)  transfer goods from seller to shipper 
C)  bill the customer 
D)  select items from inventory for shipment

Question 15

What is the purpose of the credit memo?

Accepted Answer

This document is the authorization for t

Question 16

A weekly reconciliation of cash receipts would include comparing

Accepted Answer

A)  the cash prelist with bank deposit slips 
B)  the cash prelist with remittance advices 
C)  bank deposit slips with remittance advices 
D)  journal vouchers from accounts receivable and general ledger 
A)  the cash prelist with bank deposit slips 
B)  the cash prelist with remittance advices 
C)  bank deposit slips with remittance advices 
D)  journal vouchers from accounts receivable and general ledger

Question 17

Periodically, the general ledger department receives all of the following except

Accepted Answer

A)  total increases to accounts receivable 
B)  total of all sales backorders 
C)  total of all sales 
D)  total decreases in inventory 
A)  total increases to accounts receivable 
B)  total of all sales backorders 
C)  total of all sales 
D)  total decreases in inventory

Question 18

What function does the receiving department serve in the revenue cycle?

Accepted Answer

The receiving department counts and insp

Question 19

Which control does not help to ensure that accurate records are kept of customer accounts and inventory?

Accepted Answer

A)  reconcile accounts receivable control to accounts receivable subsidiary 
B)  authorize credit 
C)  segregate custody of inventory from record keeping 
D)  segregate record keeping duties of general ledger from accounts receivable 
A)  reconcile accounts receivable control to accounts receivable subsidiary 
B)  authorize credit 
C)  segregate custody of inventory from record keeping 
D)  segregate record keeping duties of general ledger from accounts receivable

Question 20

In a computerized accounting system, segregation of functions refers to inventory control, accounts receivable, billing, and general ledger tasks.

Accepted Answer

A) True 
 B)False

Distinguish between a packing slip, shipping notice, and a bill of lading.

What are the three rules that ensure that no single employee or department processes a transaction in its entirety?

At which point is supervision most critical in the cash receipts system?

A credit sale is made to a customer, even though the customer's account is four months overdue. Describe a specific internal control procedure that would prevent this from happening.

The stock release document is prepared by the shipping department to provide evidence that the goods have been released to the customer.

The reconciliation that occurs in the shipping department is intended to ensure that

The shipping notice

In a manual system, the billing department is responsible for recording the sale in the sales journal.

With regard to segregation of duties, rule one is that transaction authorization and transaction processing should be separated. What does this require in the revenue cycle?

Customers should be billed for back-orders when

What specific internal control procedure would prevent the shipping clerk from taking goods from the storeroom and sending them to someone who had not placed an order?

In most large organizations, the journal voucher file has replaced the formal general journal.

Internal controls for handling sales returns and allowances do not include

The purpose of the sales invoice is to

What is the purpose of the credit memo?

A weekly reconciliation of cash receipts would include comparing

Periodically, the general ledger department receives all of the following except

What function does the receiving department serve in the revenue cycle?

Which control does not help to ensure that accurate records are kept of customer accounts and inventory?

In a computerized accounting system, segregation of functions refers to inventory control, accounts receivable, billing, and general ledger tasks.

Auditing and Internal Control

Auditing IT Governance Controls

Auditing Operating Systems and Networks

Auditing Database Systems

Systems Development and Program Change Activities

Transaction Processing and Financial Reporting Systems Overview

Computer Assisted Audit Tools and Techniques

Data Structures and Caatts for Data Extraction

Auditing the Expenditure Cycle

Enterprise Resource Planning Systems

Business Ethics, Fraud, and Fraud Detection

Filters

Exam 9: Auditing the Revenue Cycle

Distinguish between a packing slip, shipping notice, and a bill of lading.

What are the three rules that ensure that no single employee or department processes a transaction in its entirety?

At which point is supervision most critical in the cash receipts system?

A credit sale is made to a customer, even though the customer's account is four months overdue. Describe a specific internal control procedure that would prevent this from happening.

The stock release document is prepared by the shipping department to provide evidence that the goods have been released to the customer.

The reconciliation that occurs in the shipping department is intended to ensure that

The shipping notice

In a manual system, the billing department is responsible for recording the sale in the sales journal.

With regard to segregation of duties, rule one is that transaction authorization and transaction processing should be separated. What does this require in the revenue cycle?

Customers should be billed for back-orders when

What specific internal control procedure would prevent the shipping clerk from taking goods from the storeroom and sending them to someone who had not placed an order?

In most large organizations, the journal voucher file has replaced the formal general journal.

Internal controls for handling sales returns and allowances do not include

The purpose of the sales invoice is to

What is the purpose of the credit memo?

A weekly reconciliation of cash receipts would include comparing

Periodically, the general ledger department receives all of the following except

What function does the receiving department serve in the revenue cycle?

Which control does not help to ensure that accurate records are kept of customer accounts and inventory?

In a computerized accounting system, segregation of functions refers to inventory control, accounts receivable, billing, and general ledger tasks.

Auditing and Internal Control

Auditing IT Governance Controls

Auditing Operating Systems and Networks

Auditing Database Systems

Systems Development and Program Change Activities

Transaction Processing and Financial Reporting Systems Overview

Computer Assisted Audit Tools and Techniques

Data Structures and Caatts for Data Extraction

Auditing the Expenditure Cycle

Enterprise Resource Planning Systems

Business Ethics, Fraud, and Fraud Detection

Filters