Exam 9: Auditing the Revenue Cycle

State two specific functions or jobs that should be segregated in the cash receipts system.

Which department prepares the bill of lading?

Which type of control is considered a compensating control?

What specific internal control procedure would detect the misplacement of a sales invoice after preparation and not mailed to the customer? The invoice was never found.

In real-time processing systems, routine credit authorizations are automated.

Which document triggers the revenue cycle?

The revenue cycle consists of

The packing slip is also known as the shipping notice.

What specific internal control procedure would prevent an increase in sales returns since salesmen were placed on commission?

Which of following functions should be segregated?

The most effective internal control procedure to prevent or detect the creation of fictitious credit memoranda for sales returns is to

What role does each of the following departments play in the cash receipts subsystem: mail room, cash receipts, accounts receivable, and general ledger? Be complete.

How is independent verification carried out in a manual revenue system?

What specific internal control procedure would prevent the sale of goods on account to a fictitious customer?

Copies of the sales order can be used for all of the following except

Describe the key tasks in the sales order process.

The accounts receivable clerk is responsible for updating the AR Control accounts to reflect each customer sale.

For the revenue cycle, state two specific independent verifications that should be performed.

How may an employee embezzle funds by issuing an unauthorized sales credit memo if the appropriate segregation of functions and authorization controls were not in place?

The principal source document in the sales order system is the sales order.