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

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Many manufacturing and merchandising audit clients record sales based on shipment of goods criterion and make the necessary adjustments at period end to record revenues in the proper period.

(True/False)

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Question 81

Below are listed possible misstatements that could occur in the sales and collections cycle. Provide the analytical procedure that would be most useful in detecting the possible misstatement. a. overstatement of sales and accounts receivable b. uncollectible accounts receivable that have not been provided for c. overstatement of sales returns and allowances

(Essay)

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Question 82

The auditor is reviewing the receivables listed on the aged trial balance for notes and related party receivables. Which balance-related audit objective is he trying to satisfy?

(Multiple Choice)

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Question 83

The auditor must have a thorough understanding of the accounting standards, including presentation and disclosure requirements, for accounts receivable when performing the audit of accounts receivable.

(True/False)

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Question 84

Both U.S. and international auditing standards require the use of confirmations for accounts receivable.

(True/False)

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Question 85

The audit procedure that provides the auditor with the most appropriate evidence when performing test of details of balances for accounts receivable is

(Multiple Choice)

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Question 86

The net realizable value of accounts receivable is equal to:

(Multiple Choice)

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Question 87

Negative confirmations are less expensive, and less reliable, than positive confirmations.

(True/False)

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Question 88

Audit data analytics can be used to test accuracy of invoices outstanding at the end of the year by matching these invoices to subsequent cash receipts after year-end.

(True/False)

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Question 89

Which of the following is a correct statement regarding analytical procedures?

(Multiple Choice)

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Question 90

For cash receipts, the occurrence transaction-related audit objective affects which of the following balance-related audit objectives?

(Multiple Choice)

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Question 91

The auditor can use audit data analytics to identify potential situations where sales returns are understated or the allowance for doubtful accounts is understated for specific customers.

(True/False)

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Question 92

Each client misstatement in accounts receivable must be analyzed to determine whether it was consistent with the original assessed level of control risk.

(True/False)

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Question 93

A customer mails and records a check to a client for payment of an unpaid account on December 30. The client receives and records the amount on January 2. The records of the two organizations will be different on December 31. This represents

(Multiple Choice)

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Question 94

Confirmation is the most common test of details of balances for the accuracy of accounts receivable.

(True/False)

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Question 95

The confirmations must be mailed by the auditor, but should contain the return address of the client.

(True/False)

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Question 96

Which of the following most likely would be detected by a review of a client's sales cutoff?

(Multiple Choice)

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Question 97

The most important test of details of balances to determine the existence of recorded accounts receivable is

(Multiple Choice)

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Question 98

After the auditor is satisfied with the allowance for uncollectible accounts, it is easy to verify bad debt expense.

(True/False)

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Question 99

Recording a sale that did not occur violates the occurrence transaction-related audit objective and the existence balance-related audit objective.

(True/False)

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Question 100

Showing 81 - 100 of 131

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

Many manufacturing and merchandising audit clients record sales based on shipment of goods criterion and make the necessary adjustments at period end to record revenues in the proper period.

The auditor is reviewing the receivables listed on the aged trial balance for notes and related party receivables. Which balance-related audit objective is he trying to satisfy?

The auditor must have a thorough understanding of the accounting standards, including presentation and disclosure requirements, for accounts receivable when performing the audit of accounts receivable.

Both U.S. and international auditing standards require the use of confirmations for accounts receivable.

The audit procedure that provides the auditor with the most appropriate evidence when performing test of details of balances for accounts receivable is

The net realizable value of accounts receivable is equal to:

Negative confirmations are less expensive, and less reliable, than positive confirmations.

Audit data analytics can be used to test accuracy of invoices outstanding at the end of the year by matching these invoices to subsequent cash receipts after year-end.

Which of the following is a correct statement regarding analytical procedures?

For cash receipts, the occurrence transaction-related audit objective affects which of the following balance-related audit objectives?

The auditor can use audit data analytics to identify potential situations where sales returns are understated or the allowance for doubtful accounts is understated for specific customers.

Each client misstatement in accounts receivable must be analyzed to determine whether it was consistent with the original assessed level of control risk.

A customer mails and records a check to a client for payment of an unpaid account on December 30. The client receives and records the amount on January 2. The records of the two organizations will be different on December 31. This represents

Confirmation is the most common test of details of balances for the accuracy of accounts receivable.

The confirmations must be mailed by the auditor, but should contain the return address of the client.

Which of the following most likely would be detected by a review of a client's sales cutoff?

The most important test of details of balances to determine the existence of recorded accounts receivable is

After the auditor is satisfied with the allowance for uncollectible accounts, it is easy to verify bad debt expense.

Recording a sale that did not occur violates the occurrence transaction-related audit objective and the existence balance-related audit objective.

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 of the Sales and Collection Cycle: Tests of Controls

Audit Sampling for Tests of Controls and Substantive Tests of Transactions

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

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