Exam 16: Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Favorable results from analytical procedures may reduce the extent to which the auditor needs to test details of balances.

(True/False)

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Question 21

Which of the following audit procedures would normally be included in the audit plan when auditing the allowance for doubtful accounts?

(Multiple Choice)

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Question 22

Cutoff misstatements can occur for

(Multiple Choice)

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Question 23

When an auditor tests to determine if all existing accounts receivable are included in the aged trial balance,

(Multiple Choice)

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Question 24

Because of its central role in auditing of accounts receivable, which of the following would normally be one of the first items tested?

(Multiple Choice)

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Question 25

The understatement of sales and accounts receivable is best uncovered by

(Multiple Choice)

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Question 26

Which audit procedure would the auditor use to test for the cutoff balance-related audit objective?

(Multiple Choice)

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Question 27

Confirmation of accounts receivable selected from the trial balance is the most common test of details of balances for the ________ of accounts receivable.

(Multiple Choice)

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Question 28

When sending confirmations during most audits of accounts receivable, the emphasis is often on confirming larger and older accounts.

(True/False)

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Question 29

Auditors are especially concerned with three aspects of internal control for the sales and collection cycle. Which of the following is not one of their major concerns?

(Multiple Choice)

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Question 30

The results of the tests of controls determine whether assessed control risk for sales and cash receipts needs to be revised.

(True/False)

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Question 31

Generally accepted accounting principles require that revenue be reported net of sales returns and allowances

(Multiple Choice)

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Question 32

Name three data visualization techniques which can be used by the auditor for evaluating disaggregated data which may be helpful in identifying unexpected amounts, relationships, or trends in accounts receivable.

(Essay)

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Question 33

Blank confirmations are considered less reliable than standard positive confirmations.

(True/False)

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Question 34

If sales are made FOB (free on board) shipping point or FOB destination at a period end, revenue does not need to be adjusted in either situation.

(True/False)

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Question 35

For effective internal control, employees maintaining the accounts receivable subsidiary ledger should not also approve

(Multiple Choice)

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Question 36

When allocating the preliminary judgment about materiality for the financial statements, accounts receivable is typically one of the most material accounts in the financial statements for companies selling on credit.

(True/False)

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Question 37

Tests of which balance-related audit objective are normally performed first in an audit of the sales and collection?

(Multiple Choice)

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Question 38

Match seven of the terms (a-k) with the definitions provided below (1-7).

a letter, addressed to the debtor, requesting that the recipient indicate directly on the letter whether the stated account balance is correct or incorrect and, if incorrect, by what amount

realizable value of accounts receivable

the follow-up of a positive confirmation not returned by the debtor with the use of documentation evidence to determine whether the recorded receivable exists

positive confirmation

misstatements that take place as a result of current period transactions being recorded in a subsequent period, or subsequent period transactions being recorded in the current period

timing difference in an account receivable confirmation

Correct Answer:

Verified

a letter, addressed to the debtor, requesting that the recipient indicate directly on the letter whether the stated account balance is correct or incorrect and, if incorrect, by what amount

the follow-up of a positive confirmation not returned by the debtor with the use of documentation evidence to determine whether the recorded receivable exists

misstatements that take place as a result of current period transactions being recorded in a subsequent period, or subsequent period transactions being recorded in the current period

a listing of the balances in the accounts receivable master file at the balance sheet date broken down according to the amount of time that has passed between the date of sale and the balance sheet date

a letter, addressed to the debtor, requesting a response only if the recipient disagrees with the amount of the stated account balance

a letter, addressed to the debtor, requesting the recipient to fill in the amount of the accounts receivable balance

a reported difference in a confirmation from a debtor that is determined to be a timing difference between the client's and debtor's records and therefore not a misstatement

(Matching)

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Question 39

An auditor is comparing the write-off of uncollectible accounts as a percentage of total accounts receivable with previous years. A possible misstatement this procedure could uncover is

(Multiple Choice)

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Question 40

Showing 21 - 40 of 131

Exam 16: Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Favorable results from analytical procedures may reduce the extent to which the auditor needs to test details of balances.

Which of the following audit procedures would normally be included in the audit plan when auditing the allowance for doubtful accounts?

Cutoff misstatements can occur for

When an auditor tests to determine if all existing accounts receivable are included in the aged trial balance,

Because of its central role in auditing of accounts receivable, which of the following would normally be one of the first items tested?

The understatement of sales and accounts receivable is best uncovered by

Which audit procedure would the auditor use to test for the cutoff balance-related audit objective?

Confirmation of accounts receivable selected from the trial balance is the most common test of details of balances for the ________ of accounts receivable.

When sending confirmations during most audits of accounts receivable, the emphasis is often on confirming larger and older accounts.

Auditors are especially concerned with three aspects of internal control for the sales and collection cycle. Which of the following is not one of their major concerns?

The results of the tests of controls determine whether assessed control risk for sales and cash receipts needs to be revised.

Generally accepted accounting principles require that revenue be reported net of sales returns and allowances

Name three data visualization techniques which can be used by the auditor for evaluating disaggregated data which may be helpful in identifying unexpected amounts, relationships, or trends in accounts receivable.

Blank confirmations are considered less reliable than standard positive confirmations.

If sales are made FOB (free on board) shipping point or FOB destination at a period end, revenue does not need to be adjusted in either situation.

For effective internal control, employees maintaining the accounts receivable subsidiary ledger should not also approve

When allocating the preliminary judgment about materiality for the financial statements, accounts receivable is typically one of the most material accounts in the financial statements for companies selling on credit.

Tests of which balance-related audit objective are normally performed first in an audit of the sales and collection?

An auditor is comparing the write-off of uncollectible accounts as a percentage of total accounts receivable with previous years. A possible misstatement this procedure could uncover is

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