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

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It is not important that the auditor evaluate and test a client' assertions early in the audit with regards to significant or unusual sales transactions, as long as the auditor evaluates and tests these assertions before the audit is completed.

(True/False)

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Question 81

When assessing planned control risk for sales,

(Multiple Choice)

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Question 82

Some companies have customers send payments directly to an address maintained by a bank. This is called a(n) ________ system.

(Multiple Choice)

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Question 83

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 84

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

(Multiple Choice)

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Question 85

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

(Multiple Choice)

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Question 86

Certain internal controls related to financial statement presentation and footnote disclosures operate infrequently, such as quarterly or annually when the financial statements are prepared.

(True/False)

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Question 87

Name the five classes of transactions included in the sales and collection cycle.

(Essay)

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Question 88

The PCAOB issued guidance in May 2017 to assist auditors of public companies implementing the new revenue recognition standard.

(True/False)

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Question 89

Smith Manufacturing Company's accounts receivable clerk has a friend who is also a customer of Smith Manufacturing. The accounts receivable clerk has issued fictitious credit memos to his friend for goods supposedly returned. The most effective procedure for preventing this activity is to

(Multiple Choice)

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Question 90

Proper accounting requires an adjustment to the allowance for uncollectible accounts after a customer with an unpaid balance to the company has declared bankruptcy or after the account has been turned over to a collection agency.

(True/False)

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Question 91

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?

(Multiple Choice)

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Question 92

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 93

tests are for omitted transactions, while tests are for nonexistent transactions.

(Multiple Choice)

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Question 94

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

(Multiple Choice)

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Question 95

There are no differences in the nature and the account titles in the sales and collection cycle for a service industry, a retail company, and an insurance company, for example.

(True/False)

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Question 96

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 97

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

(True/False)

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Question 98

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

(Multiple Choice)

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Question 99

Which one of the following would the auditor consider to be an incompatible operation if the cashier receives remittances from the mail room?

(Multiple Choice)

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Question 100

Showing 81 - 100 of 140

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

It is not important that the auditor evaluate and test a client' assertions early in the audit with regards to significant or unusual sales transactions, as long as the auditor evaluates and tests these assertions before the audit is completed.

When assessing planned control risk for sales,

Some companies have customers send payments directly to an address maintained by a bank. This is called a(n) ________ system.

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

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

Certain internal controls related to financial statement presentation and footnote disclosures operate infrequently, such as quarterly or annually when the financial statements are prepared.

Name the five classes of transactions included in the sales and collection cycle.

The PCAOB issued guidance in May 2017 to assist auditors of public companies implementing the new revenue recognition standard.

Smith Manufacturing Company's accounts receivable clerk has a friend who is also a customer of Smith Manufacturing. The accounts receivable clerk has issued fictitious credit memos to his friend for goods supposedly returned. The most effective procedure for preventing this activity is to

Proper accounting requires an adjustment to the allowance for uncollectible accounts after a customer with an unpaid balance to the company has declared bankruptcy or after the account has been turned over to a collection agency.

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?

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.

________ tests are for omitted transactions, while ________ tests are for nonexistent transactions.

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

There are no differences in the nature and the account titles in the sales and collection cycle for a service industry, a retail company, and an insurance company, for example.

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.

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

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

Which one of the following would the auditor consider to be an incompatible operation if the cashier receives remittances from the mail room?

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 Materiality

Assessing the Risk of Material Misstatement

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, 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

tests are for omitted transactions, while tests are for nonexistent transactions.