Exam 14: Audit of the Sales and Collection Cycle: Tests of Controls

Match seven of the terms for documents and records (a-k)with the descriptions provided below (1-7): -A document used internally to indicate authority to write-off an account receivable as uncollectible.

________ tests are for omitted transactions,while ________ tests are for nonexistent transactions.

The shipping point is critical because it is the first point at which company assets are released to another party.

The most difficult type of cash embezzlement for auditors to detect is when it occurs

Some companies have customers send payments directly to an address maintained by a bank.This is called a(n)________ system.

Sales transactions are the result of the following five functions in the sales and collection cycle: processing customer orders,granting credit,shipping goods,billing customers,and recording sales.

Which of the following would offer the best protection for a company that wishes to prevent a reoccurrence of a previously detected "lapping" problem with trade accounts receivable?

Match seven of the terms for documents and records (a-k)with the descriptions provided below (1-7): -A document mailed to the customer and typically returned to the seller with the cash payment.

The document used to indicate to the customer the amount of a sale and payment due date is the

Who is generally responsible for opening receipts when a company uses a lockbox to speed the handling of cash receipts?

Most companies recognize sales revenue when

Which accounts are involved in the sales class of transactions?

Cash receipts from sales on account have been misappropriated.Which of the following acts would conceal this fraud and be least likely to be detected by an auditor?

The theft of cash can occur before receipts are entered in the records or after they are entered in the records.

An effective procedure to test for unfilled shipments is to trace from the

Credit should be approved before goods are shipped to a customer.

The prelisting of cash receipts should be prepared by the individual who has primary responsibility for the recording of cash receipts.

Which of the following is not a key control for sales and cash receipts?

For each key control,one or more tests of controls must be designed to verify its effectiveness.

Violations of the occurrence/existence objective for sales are of greater concern to the auditor than violations of the completeness objective.