Exam 9: Auditing the Revenue Cycle

Analytical Procedures Explain ratio analysis as an analytical procedure used by auditors.Give examples of the ratios that auditor might want to compute for revenue cycle accounts.

(Essay)

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Question 21

Controls over completeness for the revenue cycle What control procedures should be implemented to ensure the completeness objective is met with respect to sales?

(Essay)

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Question 22

Confirmations that are sent to select customers asking them to review the current balance due the client as shown on the client's statement and return the letters directly to the auditor indicating whether they agree with the indicated balance,are known by which of the following terms?

(Multiple Choice)

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Question 23

Which of the following processes are not included in the revenue cycle?

(Multiple Choice)

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Question 24

Positive accounts receivable confirmations should be used on all accounts which represent small immaterial balances.

(True/False)

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Question 25

Requirements for confirming accounts receivable Confirmation of accounts receivable is required by auditing standards unless certain conditions exist.Identify the conditions that will be present in an audit that does not confirm accounts receivable.

(Essay)

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Question 26

The basic concept for revenue recognition is the realization of cash.

(True/False)

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Question 27

A method used by companies to fraudulently inflate revenues includes which of the following?

(Multiple Choice)

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Question 28

Unreturned positive confirmations for accounts receivable warrant which of the following actions?

(Multiple Choice)

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Question 29

The auditor has determined that the control risk for the existence assertion is low;therefore,the auditor may reduce the number of items tested on a substantive basis.

(True/False)

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Question 30

The intentional loading of sales at the end of a period to customers that do not need the goods at that time should not be recorded as revenues.

(True/False)

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Question 31

Accounts receivable presentation and disclosure Develop a list of substantive tests to test whether pledged,discounted,assigned,and related-party accounts receivable are properly disclosed.

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Question 32

A tendency for fraud may exist when the granting of stock options is dependent on reaching an earnings goal.

(True/False)

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Question 33

Which of the following is not a form of ratio analysis?

(Multiple Choice)

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Question 34

A control that may be implemented to ensure all sales that occur are recorded in the general ledger includes which of the following?

(Multiple Choice)

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Question 35

Confirmation of accounts receivable is generally not effective in addressing the existence of fictitious sales recorded by the client.

(True/False)

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Question 36

A method of testing for the completeness of sales is to test the sequence of sales invoices used during the period under audit.

(True/False)

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Question 37

Lithgow and Harris,CPAs,are performing the audit of Wild Flower Grocery Stores.Lithgow and Harris relates annual revenue to sales per square feet and sales per customer.What type of analysis is Lithgow and Harris most likely performing?

(Multiple Choice)

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Question 38

Accounts receivable risks In the financial statements,there are many risks associated with an audit that must be considered.Identify and discuss five separate risks that may exist related to accounts receivable.

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Question 39

What evidence is utilized by the auditor for analytical purposes in substantiating the completeness of the allowance for bad debt estimate?

(Multiple Choice)

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Question 40

Showing 21 - 40 of 116

Analytical Procedures Explain ratio analysis as an analytical procedure used by auditors.Give examples of the ratios that auditor might want to compute for revenue cycle accounts.

Controls over completeness for the revenue cycle What control procedures should be implemented to ensure the completeness objective is met with respect to sales?

Confirmations that are sent to select customers asking them to review the current balance due the client as shown on the client's statement and return the letters directly to the auditor indicating whether they agree with the indicated balance,are known by which of the following terms?

Which of the following processes are not included in the revenue cycle?

Positive accounts receivable confirmations should be used on all accounts which represent small immaterial balances.

Requirements for confirming accounts receivable Confirmation of accounts receivable is required by auditing standards unless certain conditions exist.Identify the conditions that will be present in an audit that does not confirm accounts receivable.

The basic concept for revenue recognition is the realization of cash.

A method used by companies to fraudulently inflate revenues includes which of the following?

Unreturned positive confirmations for accounts receivable warrant which of the following actions?

The auditor has determined that the control risk for the existence assertion is low;therefore,the auditor may reduce the number of items tested on a substantive basis.

The intentional loading of sales at the end of a period to customers that do not need the goods at that time should not be recorded as revenues.

Accounts receivable presentation and disclosure Develop a list of substantive tests to test whether pledged,discounted,assigned,and related-party accounts receivable are properly disclosed.

A tendency for fraud may exist when the granting of stock options is dependent on reaching an earnings goal.

Which of the following is not a form of ratio analysis?

A control that may be implemented to ensure all sales that occur are recorded in the general ledger includes which of the following?

Confirmation of accounts receivable is generally not effective in addressing the existence of fictitious sales recorded by the client.

A method of testing for the completeness of sales is to test the sequence of sales invoices used during the period under audit.

Lithgow and Harris,CPAs,are performing the audit of Wild Flower Grocery Stores.Lithgow and Harris relates annual revenue to sales per square feet and sales per customer.What type of analysis is Lithgow and Harris most likely performing?

Accounts receivable risks In the financial statements,there are many risks associated with an audit that must be considered.Identify and discuss five separate risks that may exist related to accounts receivable.

What evidence is utilized by the auditor for analytical purposes in substantiating the completeness of the allowance for bad debt estimate?

Quality Auditing: Why It Matters

The Auditors Responsibilities Regarding Fraud and Mechanisms to Address Fraud: Regulation and Corporate Governance

Internal Control Over Financial Reporting: Responsibilities of Management and the External Auditor

Professional Legal Liability

Professional Auditing Standards and the Audit Opinion Formulation Process

Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing Cash and Marketable Securities

Auditing Inventory, Goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, Use, Impairment, and Disposal

Auditing Long-Term Liabilities and Stockholders Equity Transactions

Completing a Quality Audit

Audit Reports

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