Exam 12: Audit of the sales and collection cycle: Tests of controls and substantive tests of transactions

Which of the following is NOT one of the five classes of transactions in the sales and collection cycle?

Which of the following is the document used as the basis for recording sales transactions and updating the accounts receivable master file?

In many audits of sales transactions, no substantive tests of transactions are performed for the completeness objective because:

Which transaction and amount in sales and collections transactions is ultimately included in balance sheet accounts?

Tests of controls should never be performed using the client's computer system; that is, all tests of control should be performed either using the auditor's computer or performed manually by the auditor.

Proper accounting requires that an account receivable must be written off by the client when:

A credit note is a document indicating a reduction in the amount due from a customer.

When designing tests of controls, the emphasis is on testing controls that:

Accounting information flows through the various accounts in the sales and collection cycle in which order? 1) sales (cash and sales on account)2. cash receipts 3) providing for doubtful debts 4) sales returns and allowances 5) write-off of uncollectible accounts

The process which postpones entries for the collection of receivables to conceal an existing cash shortage is referred to as:

Procedures to test whether sales are accurately recorded are normally:

Which one of the following statements regarding the five types of audit tests in the sales and collection cycle is NOT correct?

State the six specific transaction-related audit objectives for cash receipts.For each objective, describe one common test of controls.

A credit note is a document used internally indicating authority to write off an account receivable as uncollectible.

Most companies recognise sales when:

An important purpose of a remittance advice is to improve control over the custody of assets.

In converting from a performance format audit program to a design format audit program, procedures are combined.

The parts of the audit most affected by the tests of controls and substantive tests of transactions for the sales and collection cycle are the balances in: 1)accounts receivable. 2)cash. 3)bad debt expense. 4)provision for doubtful debts.

An audit procedure which compares the name, amount, and dates shown on remittance advices with cash receipts journal entries and with related duplicate deposit slips would be effective in detecting:

For good internal control, the credit-granting function should be separate from the sales function.