Question 1

The document that generates recording of a sale is the

Accepted Answer

A)  customer order. 
B)  shipping order. 
C)  invoice. 
D)  purchase order. 
A)  customer order. 
B)  shipping order. 
C)  invoice. 
D)  purchase order.

Question 2

In determining the adequacy of the allowance for uncollectible accounts,the least valuable evidence would be obtained from

Accepted Answer

A)  an aging schedule of past due accounts that the auditor has tested. 
B)  correspondence with the client's collection agency. 
C)  financial statements of individual customers. 
D)  no reply to negative confirmations. 
A)  an aging schedule of past due accounts that the auditor has tested. 
B)  correspondence with the client's collection agency. 
C)  financial statements of individual customers. 
D)  no reply to negative confirmations.

Question 3

Sales are normally recorded on the date of the

Accepted Answer

A)  customer purchase order. 
B)  bill of lading. 
C)  sales invoice. 
D)  payment check. 
A)  customer purchase order. 
B)  bill of lading. 
C)  sales invoice. 
D)  payment check.

Question 4

Is the confirmation of cash and accounts receivable required according to auditing standards? Explain.

Accepted Answer

In general,the use of confirmations for

Question 5

Auditors should not place total reliance on controls to the exclusion of other substantive testing procedures.
Question also found in study guide

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is an example of a control activity that satisfies the accuracy control objective for sales invoices?

Accepted Answer

A)  Recorded sales in the sales journal are supported by invoices. 
B)  Invoices, shipping documents, and sales orders are prenumbered and the numerical sequence is checked. 
C)  Sales are recorded in the proper account. 
D)  Invoice quantities are compared to shipment and customer order quantities. 
A)  Recorded sales in the sales journal are supported by invoices. 
B)  Invoices, shipping documents, and sales orders are prenumbered and the numerical sequence is checked. 
C)  Sales are recorded in the proper account. 
D)  Invoice quantities are compared to shipment and customer order quantities.

Question 7

For each of the tests of controls for sales and receivables,indicate the assertion that is supported by placing the correct letter in the blank.

Accepted Answer

The answer of For each of the tests of controls...

Question 8

Alpha Brewery Corporation recorded sales through January 4,2005,dating them December 31,2004.This situation is an example of a violation of which of the following assertions?

Accepted Answer

A)  Existence or occurrence. 
B)  Completeness. 
C)  Classification. 
D)  Accuracy. 
A)  Existence or occurrence. 
B)  Completeness. 
C)  Classification. 
D)  Accuracy.

Question 9

An objective for an audit is to obtain evidence related to management's financial statement assertions.
Question also found in study guide

Accepted Answer

A) True 
 B)False

Question 10

The ____________________________ confirmation form is used when individual balances are ____________________________ or accounts are in ______________________________.
Question also found in study guide

Accepted Answer

positive ;

Question 11

Accountants should be under orders to record sales and accounts receivable when

Accepted Answer

A)  the customer's order is received. 
B)  all supporting documentation of shipping is in order. 
C)  the item has been paid for. 
D)  the terms are agreed upon. 
A)  the customer's order is received. 
B)  all supporting documentation of shipping is in order. 
C)  the item has been paid for. 
D)  the terms are agreed upon.

Question 12

When obtaining evidence about accounts receivable,auditors must put emphasis on the completeness and obligations assertions.
Question also found in study guide

Accepted Answer

A) True 
 B)False

Question 13

Scanning sales invoices for missing numbers in the sequence would be an activity intended to satisfy what assertion?

Accepted Answer

A)  Completeness. 
B)  Accuracy. 
C)  Occurrence. 
D)  Classification. 
A)  Completeness. 
B)  Accuracy. 
C)  Occurrence. 
D)  Classification.

Question 14

An auditor noted that client sales had increased 10 percent for the year.At the same time,cost of goods sold as a percentage of sales had decreased from 45 percent to 40 percent and year-end accounts receivable had increased by 8 percent.The auditor is most likely concerned about

Accepted Answer

A)  unrecorded costs. 
B)  improper credit approvals. 
C)  improper sales cut-off. 
D)  fictitious sales. 
A)  unrecorded costs. 
B)  improper credit approvals. 
C)  improper sales cut-off. 
D)  fictitious sales.

Question 15

A client has a separate sales group for its largest "preferred" customers.This is a select group of customers that normally make purchases in excess of $250,000 and often have accounts receivable balances in excess of $1 million.Which of the following audit procedures would the auditor most likely perform?

Accepted Answer

A)  Prepare a schedule of purchases and payments for these customers. 
B)  Send out negative confirmations on a large sample of these customers. 
C)  Inquire of the sales manager regarding the accounts receivable terms. 
D)  Send out positive confirmations on a large sample of these customers. 
A)  Prepare a schedule of purchases and payments for these customers. 
B)  Send out negative confirmations on a large sample of these customers. 
C)  Inquire of the sales manager regarding the accounts receivable terms. 
D)  Send out positive confirmations on a large sample of these customers.

Question 16

Dual direction testing involves samples of transactions selected to obtain evidence about control over _________________________________ in one direction and control over _________________________________ in the other direction.
Question also found in study guide

Accepted Answer

completene

Question 17

Favorite Soda Company distributes beverages in the Portland,Oregon area.Which of the following would be the test to determine that shipments made were actual sales?

Accepted Answer

A)  Trace bills of lading to the sales journal. 
B)  Vouch entries made in the sales journal to the bills of lading. 
C)  Trace entries in the sales journal to accounts receivable subsidiary ledger. 
D)  Vouch bills of lading to the customer order documents. 
A)  Trace bills of lading to the sales journal. 
B)  Vouch entries made in the sales journal to the bills of lading. 
C)  Trace entries in the sales journal to accounts receivable subsidiary ledger. 
D)  Vouch bills of lading to the customer order documents.

Question 18

Which of the following internal control activities most likely would ensure that all billed sales are correctly posted to the accounts receivable ledger?

Accepted Answer

A)  Daily sales summaries are compared to daily postings to the accounts receivable ledger. 
B)  Each sales invoice is supported by a prenumbered shipping document. 
C)  The accounts receivable ledger is reconciled daily to the control account in the general ledger. 
D)  Each shipment on credit is supported by a prenumbered sales invoice. 
A)  Daily sales summaries are compared to daily postings to the accounts receivable ledger. 
B)  Each sales invoice is supported by a prenumbered shipping document. 
C)  The accounts receivable ledger is reconciled daily to the control account in the general ledger. 
D)  Each shipment on credit is supported by a prenumbered sales invoice.

Question 19

Which of the following would be the best protection for a company that wishes to prevent the "lapping" of trade accounts receivable?

Accepted Answer

A)  Separate duties so that the bookkeeper in charge of the general ledger has no access to incoming mail. 
B)  Separate duties so that no employee has access to both checks from customers and currency from daily cash receipts. 
C)  Have customers send payments directly to the company's depository bank. 
D)  Request that customer's payment checks be made payable to the company and addressed to the treasurer. 
A)  Separate duties so that the bookkeeper in charge of the general ledger has no access to incoming mail. 
B)  Separate duties so that no employee has access to both checks from customers and currency from daily cash receipts. 
C)  Have customers send payments directly to the company's depository bank. 
D)  Request that customer's payment checks be made payable to the company and addressed to the treasurer.

Question 20

The pending sales orders can be reviewed for evidence of the _________________________________ of recorded _________________________________ and ________________________________.
Question also found in study guide

Accepted Answer

completene

The document that generates recording of a sale is the

In determining the adequacy of the allowance for uncollectible accounts,the least valuable evidence would be obtained from

Sales are normally recorded on the date of the

Is the confirmation of cash and accounts receivable required according to auditing standards? Explain.

Auditors should not place total reliance on controls to the exclusion of other substantive testing procedures. Question also found in study guide

Which of the following is an example of a control activity that satisfies the accuracy control objective for sales invoices?

For each of the tests of controls for sales and receivables,indicate the assertion that is supported by placing the correct letter in the blank.

Alpha Brewery Corporation recorded sales through January 4,2005,dating them December 31,2004.This situation is an example of a violation of which of the following assertions?

An objective for an audit is to obtain evidence related to management's financial statement assertions. Question also found in study guide

The confirmation form is used when individual balances are or accounts are in __. Question also found in study guide

Accountants should be under orders to record sales and accounts receivable when

When obtaining evidence about accounts receivable,auditors must put emphasis on the completeness and obligations assertions. Question also found in study guide

Scanning sales invoices for missing numbers in the sequence would be an activity intended to satisfy what assertion?

An auditor noted that client sales had increased 10 percent for the year.At the same time,cost of goods sold as a percentage of sales had decreased from 45 percent to 40 percent and year-end accounts receivable had increased by 8 percent.The auditor is most likely concerned about

Dual direction testing involves samples of transactions selected to obtain evidence about control over _ in one direction and control over _ in the other direction. Question also found in study guide

Favorite Soda Company distributes beverages in the Portland,Oregon area.Which of the following would be the test to determine that shipments made were actual sales?

Which of the following internal control activities most likely would ensure that all billed sales are correctly posted to the accounts receivable ledger?

Which of the following would be the best protection for a company that wishes to prevent the "lapping" of trade accounts receivable?

The pending sales orders can be reviewed for evidence of the _________________ of recorded _ and ________________. Question also found in study guide

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Acquisition and Expenditure Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Audits governmental Audits and Fraud Examinations

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing and Information Technology

Filters

Exam 7: Revenue and Collection Cycle

The document that generates recording of a sale is the

In determining the adequacy of the allowance for uncollectible accounts,the least valuable evidence would be obtained from

Sales are normally recorded on the date of the

Is the confirmation of cash and accounts receivable required according to auditing standards? Explain.

Auditors should not place total reliance on controls to the exclusion of other substantive testing procedures. Question also found in study guide

Which of the following is an example of a control activity that satisfies the accuracy control objective for sales invoices?

For each of the tests of controls for sales and receivables,indicate the assertion that is supported by placing the correct letter in the blank.

Alpha Brewery Corporation recorded sales through January 4,2005,dating them December 31,2004.This situation is an example of a violation of which of the following assertions?

An objective for an audit is to obtain evidence related to management's financial statement assertions. Question also found in study guide

The ____________________________ confirmation form is used when individual balances are ____________________________ or accounts are in ______________________________. Question also found in study guide

Accountants should be under orders to record sales and accounts receivable when

When obtaining evidence about accounts receivable,auditors must put emphasis on the completeness and obligations assertions. Question also found in study guide

Scanning sales invoices for missing numbers in the sequence would be an activity intended to satisfy what assertion?

An auditor noted that client sales had increased 10 percent for the year.At the same time,cost of goods sold as a percentage of sales had decreased from 45 percent to 40 percent and year-end accounts receivable had increased by 8 percent.The auditor is most likely concerned about

Dual direction testing involves samples of transactions selected to obtain evidence about control over _________________________________ in one direction and control over _________________________________ in the other direction. Question also found in study guide

Favorite Soda Company distributes beverages in the Portland,Oregon area.Which of the following would be the test to determine that shipments made were actual sales?

Which of the following internal control activities most likely would ensure that all billed sales are correctly posted to the accounts receivable ledger?

Which of the following would be the best protection for a company that wishes to prevent the "lapping" of trade accounts receivable?

The pending sales orders can be reviewed for evidence of the _________________________________ of recorded _________________________________ and ________________________________. Question also found in study guide

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Acquisition and Expenditure Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Audits governmental Audits and Fraud Examinations

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing and Information Technology

Filters

The confirmation form is used when individual balances are or accounts are in __. Question also found in study guide

Dual direction testing involves samples of transactions selected to obtain evidence about control over _ in one direction and control over _ in the other direction. Question also found in study guide

The pending sales orders can be reviewed for evidence of the _________________ of recorded _ and ________________. Question also found in study guide