Exam 7: Revenue and Collection Cycle

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

When an audit team does not receive a response on a positive accounts receivable confirmation,auditors should do all of the following except

A comparison of checks listed on a sample of deposit slips to the detail of customer credits posted to customer accounts receivable can be an audit test for lapping. Question also found in study guide

When an audit team traces a sample of shipping documents to the related sales invoice copies,they are trying to find relevant evidence that

A customer reply on a positive confirmation says "We dispute the $250 charge.We believe it is excessive." This confirmation

Tracing shipping documents to prenumbered sales invoices provides evidence that

___________________________ may be used to access computerized receivable files to select and print confirmations. Question also found in study guide

"Bill and hold" refers to an arrangement where

A procedure to gather evidence on both account balances and controls is called a ______________________________________ procedure. Question also found in study guide

An audit team is auditing sales transactions.One step is to vouch a sample of debit entries from the accounts receivable subsidiary ledger back to the supporting sales invoices.The purpose of this audit procedure is to establish that

Which of the following controls most likely would help ensure that all credit sales transactions of an entity are recorded?

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?

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

The control activity "credit sales approved by credit department" is directed toward which transaction assertion?

The SEC requires all of the following for revenue to be recognized except

Custody of inventory is transferred to the shipping area upon authorization of

Information about the internal control system can be gathered by completing an __________________________________________. Question also found in study guide

Elm Tree Inc.has a December 31 year end.On October 15,the auditor evaluated and tested Elm Tree's internal control procedures over the sales recording process and finds the controls to be effective.At a minimum,the auditor's year-end procedures for testing internal control procedures must include

The actions in tests of controls involve ________________________________,________________________________,________________________________,_________________________________ and ________________________________. Question also found in study guide

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