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

One type of shipping document is the ________,which is a written contract between the carrier and the seller of the receipt and shipment of goods.

(Multiple Choice)

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Question 61

A bill of lading is a special type of sales invoice used when goods are shipped interstate.

(True/False)

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Question 62

Realizable value is an essential balance-related audit objective for accounts receivable.

(True/False)

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Question 63

Which of the following is not a business function within the "Sales" class of transactions?

(Multiple Choice)

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Question 64

Explain what lapping means,and discuss the internal control deficiency that allows it to occur.Also discuss the procedures the auditor can perform to detect lapping.

(Essay)

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Question 65

For each of the following potential misstatements,provide one potential audit test that could be used to detect the misstatement. • sales included in the journals for which there was no shipment • sale recorded more than once • shipments made to nonexistent customers and recorded as sales

(Essay)

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Question 66

The transaction-related audit objectives and the client's methods of controlling misstatements are essentially the same for credit memos as for sales with the exception of two differences.What are the two differences from the auditor's perspective?

(Essay)

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Question 67

Match seven of the terms for documents and records (a-k)with the descriptions provided below (1-7): -A document prepared to initiate shipment of goods,indicating the description of the merchandise,the quantity shipped,and other relevant data.It is a written contract between the carrier and seller of the receipt and shipment of goods.

(Multiple Choice)

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Question 68

A sales invoice is a document that usually indicates credit approval.

(True/False)

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Question 69

A document sent to each customer showing his or her beginning accounts receivable balance and the amount and date of each sale,cash payment received,any debit or credit memo issued,and the ending balance is the

(Multiple Choice)

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Question 70

Match seven of the terms for documents and records (a-k)with the descriptions provided below (1-7):

A document indicating a reduction in the amount due from a customer because of returned goods or an allowance.

accounts receivable master file

A document prepared to initiate shipment of goods,indicating the description of the merchandise,the quantity shipped,and other relevant data.It is a written contract between the carrier and seller of the receipt and shipment of goods.

summary sales report

A document mailed to the customer and typically returned to the seller with the cash payment.

prelisting of cash receipts

Correct Answer:

Verified

A document indicating a reduction in the amount due from a customer because of returned goods or an allowance.

A document mailed to the customer and typically returned to the seller with the cash payment.

A list prepared when cash is received by someone who has no responsibility for recording sales,accounts receivable,or cash,and has no access to the accounting records.It is used to verify whether cash received was recorded and deposited at the correct amounts and on a timely basis.

A document used internally to indicate authority to write-off an account receivable as uncollectible.

A document or electronic record indicating the description and quantity of goods sold,the price,freight charges,insurance,terms,and other relevant data.

A document for communicating the description,quantity,and related information for goods ordered by a customer.This is frequently used to indicate credit approval and authorization for shipment.

(Matching)

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Question 71

Which of the following would least concern an auditor regarding the lack of a specific authorization to conduct the sales transaction?

(Multiple Choice)

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Question 72

Which of the following is an account that is not affected by the sales and collection cycle?

(Multiple Choice)

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Question 73

The extent of tests of controls in audits of nonpublic companies depends on the effectiveness of the controls and the extent to which the auditor believes they can be relied on to reduce control risk.

(True/False)

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Question 74

The audit procedure referred to as proof of cash receipts is particularly useful to test

(Multiple Choice)

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Question 75

Which of the following tests of controls is useful to test the transaction-related audit objective of posting and summarization?

(Multiple Choice)

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Question 76

An effective procedure to test the occurrence/existence objective for sales is to vouch sales journal entries to copies of sales orders,shipping documents,and sales invoices.

(True/False)

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Question 77

When designing audit procedures,tracing of source documents to the customers subsidiary ledger and subsequently to the general ledger is done to satisfy what assertion?

(Multiple Choice)

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Question 78

You are an audit manager for Rodgers & Co.and have recently taken on a new client,Manufacturing Company.You are in the initial stages of planning the audit and have decided to start gathering information about the sales/collection cycle of the business.List below the classes of transactions that you need to gather audit evidence for in designing your audit procedures.

(Essay)

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Question 79

Which of the following is not an important aspect of billing?

(Multiple Choice)

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Question 80

Showing 61 - 80 of 123

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

One type of shipping document is the ________,which is a written contract between the carrier and the seller of the receipt and shipment of goods.

A bill of lading is a special type of sales invoice used when goods are shipped interstate.

Realizable value is an essential balance-related audit objective for accounts receivable.

Which of the following is not a business function within the "Sales" class of transactions?

Explain what lapping means,and discuss the internal control deficiency that allows it to occur.Also discuss the procedures the auditor can perform to detect lapping.

For each of the following potential misstatements,provide one potential audit test that could be used to detect the misstatement. • sales included in the journals for which there was no shipment • sale recorded more than once • shipments made to nonexistent customers and recorded as sales

The transaction-related audit objectives and the client's methods of controlling misstatements are essentially the same for credit memos as for sales with the exception of two differences.What are the two differences from the auditor's perspective?

A sales invoice is a document that usually indicates credit approval.

A document sent to each customer showing his or her beginning accounts receivable balance and the amount and date of each sale,cash payment received,any debit or credit memo issued,and the ending balance is the

Which of the following would least concern an auditor regarding the lack of a specific authorization to conduct the sales transaction?

Which of the following is an account that is not affected by the sales and collection cycle?

The extent of tests of controls in audits of nonpublic companies depends on the effectiveness of the controls and the extent to which the auditor believes they can be relied on to reduce control risk.

The audit procedure referred to as proof of cash receipts is particularly useful to test

Which of the following tests of controls is useful to test the transaction-related audit objective of posting and summarization?

An effective procedure to test the occurrence/existence objective for sales is to vouch sales journal entries to copies of sales orders,shipping documents,and sales invoices.

When designing audit procedures,tracing of source documents to the customers subsidiary ledger and subsequently to the general ledger is done to satisfy what assertion?

Which of the following is not an important aspect of billing?

The Demand for Audit and Other Assurance Services

The Cpa Profession

Audit Reports

Professional Ethics

Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Analytical Procedures

Materiality and Risk

Fraud Auditing

Internal Control and Coso Framework

Assessing Control Risk and Reporting on Internal Controls

Overall Audit Strategy and Audit Program

Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling for Tests of Details of Balances

Audit of the Acquisition and Payment Cycle: Tests of Controls,

Completing the Tests in the Acquisition and Payment Cycle:

Audit of the Payroll and Personnel Cycle

Audit of the Inventory and Warehousing Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash and Financial Instruments

Completing the Audit

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

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