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

The completeness transaction-related audit objective must be considered when determining key controls for sales.List three of the key controls that must be considered when cash received is recorded in the cash receipts journal.

Which of the following is the appropriate point at which the auditor deems authorization to be critical?

The auditor's primary concern in performing audit procedures of the write-off of uncollectible accounts relates to the risk that the client writes off customer accounts that have already been collected.The primary control for preventing this fraud is

To determine that sales are accurately recorded,the unit prices on the duplicate sales invoices are normally compared with

Which of the following is a correct statement regarding the shipment of goods?

At the completion of the tests of controls and substantive tests of transactions,auditors must analyze each exception to determine its cause and the implication of the exception on assessed control risk.

What event initiates a transaction in the sales and collection cycle?

If a company uses a periodic inventory system,the shipping records are used to update the inventory quantities.

When assessing planned control risk for sales,

The appropriate tests of controls for separation of duties are ordinarily restricted to the auditor's observations of activities and discussions with personnel.

A credit memo is a document used internally that indicates authority to write-off an account receivable as uncollectible.

When customers purchase goods by credit card,the issuer of the credit card uses EFT to transfer funds into the company's bank account.

Which one of the following statements is True? In deciding on substantive tests of transactions

Customer billing is a critical process which auditors must understand.What are the most important aspects of billing and what are the related objectives?

In the accounts receivable master file,the length of time the account has been due can be useful to the client and the auditor in preparing the

When assessing risk control,the auditor must do all of the following except

For a firm that practices good internal controls in the sales and collections cycle,the function of indicating credit approval should be recorded on which of the following documents?

Which document or record is used in the write-off of uncollectible accounts classes of transactions?

The most difficult type of cash embezzlement for the auditor to detect is when the cash is stolen before it can be recorded in the cash receipts journal.

An auditor needs to determine whether all customers of an electric utility company are being billed.The auditor should test from the