Question 1

It is beneficial in the testing of notes receivable to confirm not only the balance of the notes,but also their terms.

Accepted Answer

A) True 
 B)False  True

Question 2

The purpose of summarizing confirmation results is to list the extent of sales tested in relation to the response rate.

Accepted Answer

A) True 
 B)False  False

Question 3

An auditor would test controls related to the occurrence/existence of sales transactions by sampling recorded revenues and tracing them back to invoices and shipping documents

Accepted Answer

A) True 
 B)False  True

Question 4

Current auditing standards do not require the confirmation of receivables if accounts receivable are not material.

Accepted Answer

A) True 
 B)False

Question 5

A red flag that may alert the auditor to fraud in the revenue cycle is a trend of revenue growth that is consistent with industry results.

Accepted Answer

A) True 
 B)False

Question 6

Testing cutoff involves procedures applied to sales transactions selected from those recorded several days prior to period end and several days following period end.

Accepted Answer

A) True 
 B)False

Question 7

The most important control to ensure completeness of sales and shipping is pre-numbered shipping and billing documents.

Accepted Answer

A) True 
 B)False

Question 8

When the auditor seeks evidence concerning the allowance for doubtful accounts he or she would most likely use an aged trial balance to help identify past due balances.

Accepted Answer

A) True 
 B)False

Question 9

A comprehensive chart of accounts and a review of complex or unusual transactions by supervisory personnel are control procedures necessary for proper classification of accounts.

Accepted Answer

A) True 
 B)False

Question 10

Customer complaints noted in returned accounts receivable confirmations may be an indicator of fraud.

Accepted Answer

A) True 
 B)False

Question 11

Monitoring of the revenue cycle may be accomplished partially through the use of exception reporting

Accepted Answer

A) True 
 B)False

Question 12

Much of the understanding of revenue transactions for compliance with GAAP can be performed by which of the following procedures?

Accepted Answer

A) examining sales contracts and inquiry of management. 
B) confirming sales with customers. 
C) discussing the transactions with qualified members of the Financial Accounting Standards Board. 
D) comparing shipping documents with invoices. 
A) examining sales contracts and inquiry of management. 
B) confirming sales with customers. 
C) discussing the transactions with qualified members of the Financial Accounting Standards Board. 
D) comparing shipping documents with invoices.

Question 13

Which one of the following procedures would be considered improper for an auditor in the process of confirming receivables?

Accepted Answer

A) The auditor allows the client's staff to prepare the confirmation letters after the auditor has chosen the items to be confirmed. 
B) The auditor allows the client to sign the confirmations after they are prepared. 
C) The auditor allows the client's staff to mail the confirmation letters after he or she has proofed the typing of the letters. 
D) The auditor asks the addressee to return the confirmation to the audit firm's office. 
A) The auditor allows the client's staff to prepare the confirmation letters after the auditor has chosen the items to be confirmed. 
B) The auditor allows the client to sign the confirmations after they are prepared. 
C) The auditor allows the client's staff to mail the confirmation letters after he or she has proofed the typing of the letters. 
D) The auditor asks the addressee to return the confirmation to the audit firm's office.

Question 14

Management has been found involved in many fraudulent schemes;a common one is "channel stuffing." What does "channel stuffing" involve?

Accepted Answer

A) overly complex transactions. 
B) growth through stock acquisitions. 
C) shipment of goods not ordered. 
D) management compensation schemes. 
A) overly complex transactions. 
B) growth through stock acquisitions. 
C) shipment of goods not ordered. 
D) management compensation schemes.

Question 15

The internal audit department at Monument Company receives electronic exceptions reports for all sales transactions entered over $10,000 in total.This process is performed for the purpose of

Accepted Answer

A) drafting financial statements. 
B) monitoring revenue transactions. 
C) providing management reports to the controller. 
D) providing suggestions for operational improvement. 
A) drafting financial statements. 
B) monitoring revenue transactions. 
C) providing management reports to the controller. 
D) providing suggestions for operational improvement.

Question 16

Use of reasonableness tests by Bono Mullins,PC will include relationships between financial but not non-financial data.

Accepted Answer

A) True 
 B)False

Question 17

A company that ships a large quantity of its products from its manufacturing plant to a warehouse that it leases until the customer is ready for the product should record the delivery as revenue.

Accepted Answer

A) True 
 B)False

Question 18

Formal procedures for approving acceptance of returns that are beyond the warranty period are an appropriate control procedure for identifying and recording returned goods.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following audit procedures does not address existence/occurrence for accounts receivables and sales?

Accepted Answer

A) trace bill of lading to sales invoice and sales journal. 
B) confirm balances of unpaid invoices with customers. 
C) examine subsequent collection. 
D) scan sales journal for duplicate entries. 
A) trace bill of lading to sales invoice and sales journal. 
B) confirm balances of unpaid invoices with customers. 
C) examine subsequent collection. 
D) scan sales journal for duplicate entries.

Question 20

Which of the following is a proper control for the detection of unusual sales transactions recorded in the general ledger?

Accepted Answer

A) Electronic authorization prior to posting. 
B) Use of sequentially numbered sales documents. 
C) Random statements to customers. 
D) Review of transactions by upper management or the board. 
A) Electronic authorization prior to posting. 
B) Use of sequentially numbered sales documents. 
C) Random statements to customers. 
D) Review of transactions by upper management or the board.

It is beneficial in the testing of notes receivable to confirm not only the balance of the notes,but also their terms.

The purpose of summarizing confirmation results is to list the extent of sales tested in relation to the response rate.

An auditor would test controls related to the occurrence/existence of sales transactions by sampling recorded revenues and tracing them back to invoices and shipping documents

Current auditing standards do not require the confirmation of receivables if accounts receivable are not material.

A red flag that may alert the auditor to fraud in the revenue cycle is a trend of revenue growth that is consistent with industry results.

Testing cutoff involves procedures applied to sales transactions selected from those recorded several days prior to period end and several days following period end.

The most important control to ensure completeness of sales and shipping is pre-numbered shipping and billing documents.

When the auditor seeks evidence concerning the allowance for doubtful accounts he or she would most likely use an aged trial balance to help identify past due balances.

A comprehensive chart of accounts and a review of complex or unusual transactions by supervisory personnel are control procedures necessary for proper classification of accounts.

Customer complaints noted in returned accounts receivable confirmations may be an indicator of fraud.

Monitoring of the revenue cycle may be accomplished partially through the use of exception reporting

Much of the understanding of revenue transactions for compliance with GAAP can be performed by which of the following procedures?

Which one of the following procedures would be considered improper for an auditor in the process of confirming receivables?

Management has been found involved in many fraudulent schemes;a common one is "channel stuffing." What does "channel stuffing" involve?

The internal audit department at Monument Company receives electronic exceptions reports for all sales transactions entered over $10,000 in total.This process is performed for the purpose of

Use of reasonableness tests by Bono Mullins,PC will include relationships between financial but not non-financial data.

A company that ships a large quantity of its products from its manufacturing plant to a warehouse that it leases until the customer is ready for the product should record the delivery as revenue.

Formal procedures for approving acceptance of returns that are beyond the warranty period are an appropriate control procedure for identifying and recording returned goods.

Which of the following audit procedures does not address existence/occurrence for accounts receivables and sales?

Which of the following is a proper control for the detection of unusual sales transactions recorded in the general ledger?

Auditing: Integral to the Economy

Corporate Governance and Audits

Judgmental and Ethical Decision-Making Frameworks and Associated Professional Standards

Audit Risk,business Risk,and Audit Planning

Internal Control Over Financial Reporting

Performing an Integrated Audit

A Framework for Audit Evidence

Tools Used in Gathering Audit Evidence

Auditing for Fraud

Audit of Acquisition and Payment Cycle and Inventory

Audit of Cash and Other Liquid Assets

Audit of Long-Lived Assets and Related Expense Accounts

Audit of Longer-Term Liabilities, equity, acquisitions, and Related-Entity Transactions, long-Term Liabilities, and Equity

Ensuring Audit Quality in Completing the Audit

Auditors Reports

Professional Liability

Advanced Topics Concerning Complex Audit Judgments

Filters

Exam 10: Auditing Revenue and Related Accounts

It is beneficial in the testing of notes receivable to confirm not only the balance of the notes,but also their terms.

The purpose of summarizing confirmation results is to list the extent of sales tested in relation to the response rate.

An auditor would test controls related to the occurrence/existence of sales transactions by sampling recorded revenues and tracing them back to invoices and shipping documents

Current auditing standards do not require the confirmation of receivables if accounts receivable are not material.

A red flag that may alert the auditor to fraud in the revenue cycle is a trend of revenue growth that is consistent with industry results.

Testing cutoff involves procedures applied to sales transactions selected from those recorded several days prior to period end and several days following period end.

The most important control to ensure completeness of sales and shipping is pre-numbered shipping and billing documents.

When the auditor seeks evidence concerning the allowance for doubtful accounts he or she would most likely use an aged trial balance to help identify past due balances.

A comprehensive chart of accounts and a review of complex or unusual transactions by supervisory personnel are control procedures necessary for proper classification of accounts.

Customer complaints noted in returned accounts receivable confirmations may be an indicator of fraud.

Monitoring of the revenue cycle may be accomplished partially through the use of exception reporting

Much of the understanding of revenue transactions for compliance with GAAP can be performed by which of the following procedures?

Which one of the following procedures would be considered improper for an auditor in the process of confirming receivables?

Management has been found involved in many fraudulent schemes;a common one is "channel stuffing." What does "channel stuffing" involve?

The internal audit department at Monument Company receives electronic exceptions reports for all sales transactions entered over $10,000 in total.This process is performed for the purpose of

Use of reasonableness tests by Bono Mullins,PC will include relationships between financial but not non-financial data.

A company that ships a large quantity of its products from its manufacturing plant to a warehouse that it leases until the customer is ready for the product should record the delivery as revenue.

Formal procedures for approving acceptance of returns that are beyond the warranty period are an appropriate control procedure for identifying and recording returned goods.

Which of the following audit procedures does not address existence/occurrence for accounts receivables and sales?

Which of the following is a proper control for the detection of unusual sales transactions recorded in the general ledger?

Auditing: Integral to the Economy

Corporate Governance and Audits

Judgmental and Ethical Decision-Making Frameworks and Associated Professional Standards

Audit Risk,business Risk,and Audit Planning

Internal Control Over Financial Reporting

Performing an Integrated Audit

A Framework for Audit Evidence

Tools Used in Gathering Audit Evidence

Auditing for Fraud

Audit of Acquisition and Payment Cycle and Inventory

Audit of Cash and Other Liquid Assets

Audit of Long-Lived Assets and Related Expense Accounts

Audit of Longer-Term Liabilities, equity, acquisitions, and Related-Entity Transactions, long-Term Liabilities, and Equity

Ensuring Audit Quality in Completing the Audit

Auditors Reports

Professional Liability

Advanced Topics Concerning Complex Audit Judgments

Filters