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

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

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

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.

When auditing sales returns and allowances, the emphasis is normally on testing the completeness objective.

To test for recorded sales for which there were no actual shipments, the auditor vouches from the

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

The most significant effect of the results of the tests of controls and substantive tests of transactions in the sales and collection cycle is on

The sales and collection cycle applies to businesses that sell goods to customers or provide services to customers.

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

Which of the following is a business function related to sales returns and allowances?

A ________ is a list prepared when cash is received by someone who has no responsibility for recording sales, accounts receivable, or cash, and who has no access to the accounting records.

As a test of control, the auditor examines sales invoices for supporting documents. The relevant transaction-related audit objective is

Prenumbered documents will only be useful for control purposes if

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

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?

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.

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

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

Auditing standards indicate that if the auditor identifies a significant risk at the assertion level, the auditor is not required to perform substantive procedures.

The auditor's primary concern in the audit of the write-off of uncollectible accounts receivable is the possibility of client personnel covering up an embezzlement by writing off accounts receivable that have already been collected.