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 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.

The accurate recording of sales transactions concerns all of the following except for

In many audits,no substantive tests of transactions are made for the ________ assertion on the grounds that understatement of sales is not a concern.

Which of the following test of controls is useful to test the completeness objective for cash receipts?

Prenumbered documents will only be useful for control purposes if

Prenumbered documents are intended to help

Discuss the four business functions that result in sales transactions in a typical sales and collection cycle and,for each function,state the key documents and records involved.

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.

Credit should be approved before a customer's order is received.

Match seven of the terms for documents and records (a-k)with the descriptions provided below (1-7): -A document or electronic record indicating the description and quantity of goods sold,the price,freight charges,insurance,terms,and other relevant data.

Except for two key differences,the transaction-related audit objectives are essentially the same for the processing of credit memos as they are for sales.Which of the following are the two key differences?

A ________ is a document for communicating the description,quantity,and related information for goods ordered by a customer.

In many audits of sales transactions substantive tests of transactions can be reduced in determining the completeness objective because

The document that accompanies the customer's payment is the

In planning the audit,an auditor takes three basic steps in determining the audit procedures to be performed for any business cycle or class of transactions in order to gather audit evidence concerning possible misstatement due to error or fraud.List those three basic steps below.

When designing tests of controls and substantive tests of transactions for cash receipts,it is important to remember that

Before goods are shipped on account,a properly authorized person must

There should generally be correspondence in the client's file establishing the uncollectibility of their account.

The preparation of a sales invoice is the final step in the sales and collection cycle.

Which one of the following best describes the auditors responsibilities regarding appropriate authorizations in the sales/collections cycle?