Exam 10: Auditing the Revenue Process

An auditor most likely would limit substantive tests of sales transactions when control risk is assessed as low for the existence or occurrence assertions concerning sales transactions and the auditor has already gathered evidence supporting

Data Corporation has just computerized its billing and accounts receivable record keeping.You want to make maximum use of the new computer in your audit of Data Corporation.Which of the following audit techniques could not be performed through a computer program?

To determine whether the system of internal control operated effectively to minimize errors of failure to invoice a shipment,the auditor would select a sample of transactions from the population represented by the

When reviewing bank confirmations for any liens on receivables,the auditor is testing the ______________ assertion.

Which of the following is not an inherent risk factor for the revenue process?

Revenue is realized when a product or service is exchanged for cash or a promise to pay cash or other assets that can be converted into cash.

What is channel stuffing?

Once a CPA has determined that accounts receivable has increased because of slow collection in a "tight money" environment,the CPA would be likely to

To achieve good internal control,which department should perform the activities of matching shipping documents with sales orders and preparing daily sales summaries?

Identify four of the seven primary functions in the revenue cycle and describe each function.

An auditor would consider a cashier's job description to contain compatible duties if the cashier receives remittances from the mailroom and also

An auditor reconciles the total of the accounts receivable subsidiary ledger to the general ledger control account as of October 31.By this procedure,the auditor would be most likely to learn about which of the following?

Upon receipt of customers' checks in the mailroom,a responsible employee should prepare a listing of remittances that is forwarded to the cashier.A copy of the listing should be sent to the

Which of the following is not an issue related to the valuation of accounts receivable?

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

The confirmation of customers' accounts receivable rarely provides reliable evidence about the completeness assertion because

Auditors may use positive and/or negative forms of confirmation requests for accounts receivable.Which of the following statements is true regarding the auditor's use of confirmations?

Immediately upon receipt of cash,a responsible employee should

If the objective of a test of details is to detect the overstatement of sales,the auditor should trace transactions from the

Cooper,CPA is auditing the financial statements of a small rural municipality.The receivable balances represent residents' delinquent real estate taxes.Internal control at the municipality is weak.To determine the existence of the accounts receivable balances at the balance sheet date,Cooper would most likely