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

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

(Multiple Choice)

4.8/5

(39)

Question 41

Management's assertions for sales and collection activities remain the same whether sales are generated through traditional or e-commerce activities.

(True/False)

4.8/5

(32)

Question 42

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

(Multiple Choice)

4.7/5

(38)

Question 43

A document prepared to initiate shipment of the goods sold by an independent shipper is the:

(Multiple Choice)

4.8/5

(29)

Question 44

The auditor's objectives for the sales and cash collections activities when the client is primarily an e-commerce business as compared to a "bricks and mortar" business are:

(Multiple Choice)

4.9/5

(34)

Question 45

An audit procedure that compares the name, amount, and dates shown on remittance advices, either paper of electronic via direct deposit, with cash receipts journal entries and with related duplicate deposit slips would be effective in detecting:

(Multiple Choice)

4.8/5

(29)

Question 46

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

(Multiple Choice)

4.7/5

(33)

Question 47

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?

(Multiple Choice)

4.8/5

(38)

Question 48

A document that initiates shipment of goods and indicates the description of the merchandise, the quantity shipped, and customer name and address is the:

(Multiple Choice)

5.0/5

(35)

Question 49

For each significant internal control deficiency identified by the auditor, he or she should design one or more tests of controls to assess the extent of the deficiency and its effect on the financial statements.

(True/False)

5.0/5

(38)

Question 50

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?

(Multiple Choice)

4.8/5

(39)

Question 51

The sales journal is generated from the sales transaction file.

(True/False)

4.9/5

(34)

Question 52

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

(True/False)

4.9/5

(41)

Question 53

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

(Multiple Choice)

4.7/5

(47)

Question 54

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)

4.9/5

(31)

Question 55

Sales should be billed and recorded as soon as possible after the shipment takes place.

(True/False)

4.7/5

(29)

Question 56

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.

Sales order

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

Customer order form

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

Sales invoice

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

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.

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 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.

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.

(Matching)

4.8/5

(35)

Question 57

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

(Multiple Choice)

4.9/5

(43)

Question 58

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

(True/False)

4.8/5

(36)

Question 59

When assessing planned control risk for sales:

(Multiple Choice)

5.0/5

(43)

Question 60

Showing 41 - 60 of 109

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

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

Management's assertions for sales and collection activities remain the same whether sales are generated through traditional or e-commerce activities.

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

A document prepared to initiate shipment of the goods sold by an independent shipper is the:

The auditor's objectives for the sales and cash collections activities when the client is primarily an e-commerce business as compared to a "bricks and mortar" business are:

An audit procedure that compares the name, amount, and dates shown on remittance advices, either paper of electronic via direct deposit, with cash receipts journal entries and with related duplicate deposit slips would be effective in detecting:

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

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?

A document that initiates shipment of goods and indicates the description of the merchandise, the quantity shipped, and customer name and address is the:

For each significant internal control deficiency identified by the auditor, he or she should design one or more tests of controls to assess the extent of the deficiency and its effect on the financial statements.

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 sales journal is generated from the sales transaction file.

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

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

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?

Sales should be billed and recorded as soon as possible after the shipment takes place.

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

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

When assessing planned control risk for sales:

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

Internal Control, Control Risk, and Section 404 Audits

Fraud Auditing

The Impact of Information Technology on the Audit Process

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, Substantive Tests of Transactions, and Accounts Payable

Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts

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

Filters