Question 1

Sales returns should be recorded in the period in which the return occurs.

Accepted Answer

A) True 
 B)False  False

Question 2

Testing the information on the aged trial balance for detail tie-in is a necessary audit procedure which would normally include:

Accepted Answer

A)  tracing a sample of individual balances to supporting documents. 
B)  comparing the total of the trial balance with the general ledger accounts receivable account. 
C)  test footing the total column and the columns depicting the aging. 
D)  all of the above 
A)  tracing a sample of individual balances to supporting documents. 
B)  comparing the total of the trial balance with the general ledger accounts receivable account. 
C)  test footing the total column and the columns depicting the aging. 
D)  all of the above D

Question 3

Tests of details of balances are directed to:

Accepted Answer

A)  balance sheet accounts for all cycles. 
B)  income statement accounts for all cycles. 
C)  all general ledger accounts for all cycles. 
D)  balance sheet accounts for some cycles and income statement accounts for other cycles. 
A)  balance sheet accounts for all cycles. 
B)  income statement accounts for all cycles. 
C)  all general ledger accounts for all cycles. 
D)  balance sheet accounts for some cycles and income statement accounts for other cycles. A

Question 4

For most audits, a proper cash receipts cutoff is more important than either the sales or the sales returns and allowances cutoff.

Accepted Answer

A) True 
 B)False

Question 5

The auditor learns that collections of accounts receivable during the first ten days of January were entered as debits to cash and credits to accounts receivable as of December 31.The effect generally will be to:

Accepted Answer

A)  overstate working capital with no effect on the current ratio at December 31. 
B)  overstate the current ratio with no effect on working capital at December 31. 
C)  overstate both working capital and the current ratio at December 31. 
D)  leave both working capital and the current ratio unchanged at December 31. 
A)  overstate working capital with no effect on the current ratio at December 31. 
B)  overstate the current ratio with no effect on working capital at December 31. 
C)  overstate both working capital and the current ratio at December 31. 
D)  leave both working capital and the current ratio unchanged at December 31.

Question 6

The starting point for the evaluation of the allowance for doubtful debts is:

Accepted Answer

A)  last year's audit findings. 
B)  a review of controls related to the auditee's credit policy. 
C)  an analysis of write-off authorisations. 
D)  the aged trial balance. 
A)  last year's audit findings. 
B)  a review of controls related to the auditee's credit policy. 
C)  an analysis of write-off authorisations. 
D)  the aged trial balance.

Question 7

________ to positive confirmations do NOT provide audit evidence.

Accepted Answer

A)  Responses 
B)  Follow-ups 
C)  Non-responses 
D)  all of the above 
A)  Responses 
B)  Follow-ups 
C)  Non-responses 
D)  all of the above

Question 8

When are analytical procedures performed?

Accepted Answer

A)  as a part of completing the audit 
B)  during the planning phase 
C)  when performing detailed tests 
D)  all of the above 
A)  as a part of completing the audit 
B)  during the planning phase 
C)  when performing detailed tests 
D)  all of the above

Question 9

It is appropriate to regard confirmations mailed but not returned by customers as significant audit evidence.

Accepted Answer

A) True 
 B)False

Question 10

Discuss three tests auditors perform to satisfy themselves that a client's allowance for doubtful debts is adequate.

Accepted Answer

First, auditors review the client's cont

Question 11

The realisable value of accounts receivable equals gross accounts receivable less the allowance for doubtful debts account.

Accepted Answer

A) True 
 B)False

Question 12

Assess control risk for accounts receivable is part of which phase of the audit?

Accepted Answer

A)  Phase I 
B)  Phase II 
C)  Phase III 
D)  Phase IV 
A)  Phase I 
B)  Phase II 
C)  Phase III 
D)  Phase IV

Question 13

The criterion used by most merchandising and manufacturing clients for determining when a sale takes place is whether an order for goods has been received from a customer.

Accepted Answer

A) True 
 B)False

Question 14

The most important test for the existence/occurrence objective for accounts receivable is:

Accepted Answer

A)  internal control over balances confirmed. 
B)  ownership of the balances confirmed. 
C)  existence of the balances confirmed. 
D)  collectability of the balances confirmed. 
A)  internal control over balances confirmed. 
B)  ownership of the balances confirmed. 
C)  existence of the balances confirmed. 
D)  collectability of the balances confirmed.

Question 15

Describe the types of 'unusual balances' auditors are looking for when they review the accounts receivable master file.

Accepted Answer

Auditors are obviously concerned with la

Question 16

It is easy to test for a cash receipts cutoff misstatement by tracing recorded cash receipts to subsequent-period bank deposits on the bank statement.

Accepted Answer

A) True 
 B)False

Question 17

How is the client's estimate of the total amount of uncollectible receivables represented?

Accepted Answer

A)  by the provision for doubtful debts account 
B)  by the bad debts expense account on the income statement 
C)  by the accounts with credit balances in the accounts receivable subsidiary ledger 
D)  in a footnote disclosure in the financial statements 
A)  by the provision for doubtful debts account 
B)  by the bad debts expense account on the income statement 
C)  by the accounts with credit balances in the accounts receivable subsidiary ledger 
D)  in a footnote disclosure in the financial statements

Question 18

Tests of details of balances focus on testing the year-end balances of balance sheet accounts.

Accepted Answer

A) True 
 B)False

Question 19

Discuss the circumstances in which it is acceptable to use negative confirmation requests.

Accepted Answer

It is acceptable to use negative confirm

Question 20

Discuss the audit procedures performed when testing the detail tie-in objective for accounts receivable, and explain why this objective is ordinarily tested before any other objectives for accounts receivable.

Accepted Answer

When testing the detail tie-in objective

Sales returns should be recorded in the period in which the return occurs.

Testing the information on the aged trial balance for detail tie-in is a necessary audit procedure which would normally include:

Tests of details of balances are directed to:

For most audits, a proper cash receipts cutoff is more important than either the sales or the sales returns and allowances cutoff.

The auditor learns that collections of accounts receivable during the first ten days of January were entered as debits to cash and credits to accounts receivable as of December 31.The effect generally will be to:

The starting point for the evaluation of the allowance for doubtful debts is:

________ to positive confirmations do NOT provide audit evidence.

When are analytical procedures performed?

It is appropriate to regard confirmations mailed but not returned by customers as significant audit evidence.

Discuss three tests auditors perform to satisfy themselves that a client's allowance for doubtful debts is adequate.

The realisable value of accounts receivable equals gross accounts receivable less the allowance for doubtful debts account.

Assess control risk for accounts receivable is part of which phase of the audit?

The criterion used by most merchandising and manufacturing clients for determining when a sale takes place is whether an order for goods has been received from a customer.

The most important test for the existence/occurrence objective for accounts receivable is:

Describe the types of 'unusual balances' auditors are looking for when they review the accounts receivable master file.

It is easy to test for a cash receipts cutoff misstatement by tracing recorded cash receipts to subsequent-period bank deposits on the bank statement.

How is the client's estimate of the total amount of uncollectible receivables represented?

Tests of details of balances focus on testing the year-end balances of balance sheet accounts.

Discuss the circumstances in which it is acceptable to use negative confirmation requests.

Discuss the audit procedures performed when testing the detail tie-in objective for accounts receivable, and explain why this objective is ordinarily tested before any other objectives for accounts receivable.

Demand for audit and assurance services

Auditors’ legal environment

Audit quality and ethics

Audit responsibilities and objectives

Audit evidence

Audit planning and documentation

Materiality and risk

Internal control and control risk

Fraud auditing

The impact of information technology on the audit process

Overall audit plan and audit program

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

Audit sampling

Audit of transaction cycles and financial statement balances I

Audit of transaction cycles and financial statement balances II

Completing the audit

Audit reporting

Other auditing and assurance engagements

Filters

Exam 13: Completing tests in the sales and collection cycle: Accounts receivable

Sales returns should be recorded in the period in which the return occurs.

Testing the information on the aged trial balance for detail tie-in is a necessary audit procedure which would normally include:

Tests of details of balances are directed to:

For most audits, a proper cash receipts cutoff is more important than either the sales or the sales returns and allowances cutoff.

The auditor learns that collections of accounts receivable during the first ten days of January were entered as debits to cash and credits to accounts receivable as of December 31.The effect generally will be to:

The starting point for the evaluation of the allowance for doubtful debts is:

________ to positive confirmations do NOT provide audit evidence.

When are analytical procedures performed?

It is appropriate to regard confirmations mailed but not returned by customers as significant audit evidence.

Discuss three tests auditors perform to satisfy themselves that a client's allowance for doubtful debts is adequate.

The realisable value of accounts receivable equals gross accounts receivable less the allowance for doubtful debts account.

Assess control risk for accounts receivable is part of which phase of the audit?

The criterion used by most merchandising and manufacturing clients for determining when a sale takes place is whether an order for goods has been received from a customer.

The most important test for the existence/occurrence objective for accounts receivable is:

Describe the types of 'unusual balances' auditors are looking for when they review the accounts receivable master file.

It is easy to test for a cash receipts cutoff misstatement by tracing recorded cash receipts to subsequent-period bank deposits on the bank statement.

How is the client's estimate of the total amount of uncollectible receivables represented?

Tests of details of balances focus on testing the year-end balances of balance sheet accounts.

Discuss the circumstances in which it is acceptable to use negative confirmation requests.

Discuss the audit procedures performed when testing the detail tie-in objective for accounts receivable, and explain why this objective is ordinarily tested before any other objectives for accounts receivable.

Demand for audit and assurance services

Auditors’ legal environment

Audit quality and ethics

Audit responsibilities and objectives

Audit evidence

Audit planning and documentation

Materiality and risk

Internal control and control risk

Fraud auditing

The impact of information technology on the audit process

Overall audit plan and audit program

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

Audit sampling

Audit of transaction cycles and financial statement balances I

Audit of transaction cycles and financial statement balances II

Completing the audit

Audit reporting

Other auditing and assurance engagements

Filters