Question 1

The aged accounts receivable report is utilized by the auditor to

Accepted Answer

A) encourage the client to collect on receivables that are long past due. 
B) select the type of confirmations that will be sent to banks. 
C) assess the adequacy of the allowance for doubtful accounts. 
D) identify debits in the receivables balance that should be reclassified to payables. 
A) encourage the client to collect on receivables that are long past due. 
B) select the type of confirmations that will be sent to banks. 
C) assess the adequacy of the allowance for doubtful accounts. 
D) identify debits in the receivables balance that should be reclassified to payables.

Question 2

The auditor of the revenue cycle of ABC Company computes an estimate of ABC's allowance for doubtful accounts and compares it to the estimate provided by ABC's management.The purpose for this procedure is to substantiate which of the following assertions?

Accepted Answer

A) existence of receivables 
B) completeness of receivables 
C) valuation of receivables 
D) rights to receivables 
A) existence of receivables 
B) completeness of receivables 
C) valuation of receivables 
D) rights to receivables

Question 3

Sources of information used for determining substantive procedures include which of the following?

Accepted Answer

A) knowledge of client's business and industry. 
B) assessment of risk of material misstatement. 
C) results of analytical procedures. 
D) all of the above. 
A) knowledge of client's business and industry. 
B) assessment of risk of material misstatement. 
C) results of analytical procedures. 
D) all of the above.

Question 4

When the client has a large number of relatively small accounts receivable and the assessed level of control risk for receivables and related revenue transactions is high,the auditor is more likely to use negative confirmations.

Accepted Answer

A) True 
 B)False

Question 5

A review of the terms of client debt agreements assists the audit of the presentation and disclosure assertion for accounts receivable.

Accepted Answer

A) True 
 B)False

Question 6

The revenue cycle considered by auditors includes the sales process but not cash collections.

Accepted Answer

A) True 
 B)False

Question 7

Negative confirmations are considered to be more persuasive than positive confirmations.

Accepted Answer

A) True 
 B)False

Question 8

Monitoring is one of the five components of the COSO internal control framework.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

Control procedures to ensure that the ob

Question 10

Sales transactions should be documented at initiation in order to do which of the following?

Accepted Answer

A) provide the customer a copy of the transaction. 
B) provide evidence of authorization and recording. 
C) offer credit to customers. 
D) generate back orders. 
A) provide the customer a copy of the transaction. 
B) provide evidence of authorization and recording. 
C) offer credit to customers. 
D) generate back orders.

Question 11

Which of the following is the best example of the control objective in the revenue cycle that all transactions are recorded accurately?

Accepted Answer

A) Sales are recorded at the invoice price expected to be collected from customers. 
B) Sales orders have sequential numbering. 
C) Recorded sales transactions are evidenced by valid invoices and shipping documents. 
D) Credits to customer accounts are classified as liabilities. 
A) Sales are recorded at the invoice price expected to be collected from customers. 
B) Sales orders have sequential numbering. 
C) Recorded sales transactions are evidenced by valid invoices and shipping documents. 
D) Credits to customer accounts are classified as liabilities.

Question 12

An example of a test for completeness in the revenue cycle includes the sampling of shipping documents and tracing them to the sales journal and general ledger.

Accepted Answer

A) True 
 B)False

Question 13

The auditor's determination that day's sales in accounts receivable increased from 44 days to 100 days would usually be found through the use of ratio analysis.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

If control risk is assessed high,the auditor may send significantly fewer confirmations for a sample of accounts receivable than if the control risk is assessed low.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is a control that may be implemented to ensure all sales that occur are recorded in the general ledger?

Accepted Answer

A) use of prenumbered shipping,invoice and sales documents. 
B) use of prenumbered statements,inventory lists and credit memos. 
C) reconciliation of invoices with customer statements. 
D) use of pre-authorized price lists. 
A) use of prenumbered shipping,invoice and sales documents. 
B) use of prenumbered statements,inventory lists and credit memos. 
C) reconciliation of invoices with customer statements. 
D) use of pre-authorized price lists.

Question 17

Which of the following must exist prior to the recognition of revenue by a company from the sale of a product?

Accepted Answer

A) The cash is realized on the sale of the product. 
B) A price is discussed based upon the customer's resale of the product. 
C) The customer is given the option to return the product at any time. 
D) The product is adequately delivered to the customer. 
A) The cash is realized on the sale of the product. 
B) A price is discussed based upon the customer's resale of the product. 
C) The customer is given the option to return the product at any time. 
D) The product is adequately delivered to the customer.

Question 18

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.

Accepted Answer

The substantive procedures that would be

Question 19

Confirmations that are sent to customers asking them to review the current balance due the client and return the letters directly to the auditor indicating whether they agree with the indicated balance,are known as

Accepted Answer

A) direct confirmations. 
B) indirect confirmations. 
C) positive confirmations. 
D) negative confirmations. 
A) direct confirmations. 
B) indirect confirmations. 
C) positive confirmations. 
D) negative confirmations.

Question 20

Fraud related to revenue recognition will most likely be identified by the auditor through which of the following independent situations?

Accepted Answer

A) Sales have increased 5% in the current period over the previous period and is consistent with the results of competitors. 
B) Gross margin is equivalent in the current period to previous periods and is below that of the industry. 
C) Sales are higher in the month preceding each quarter end. 
D) The sales of a revolutionary new product are increasing beyond that of the competition in the periods immediately following its introduction. 
A) Sales have increased 5% in the current period over the previous period and is consistent with the results of competitors. 
B) Gross margin is equivalent in the current period to previous periods and is below that of the industry. 
C) Sales are higher in the month preceding each quarter end. 
D) The sales of a revolutionary new product are increasing beyond that of the competition in the periods immediately following its introduction.

The aged accounts receivable report is utilized by the auditor to

The auditor of the revenue cycle of ABC Company computes an estimate of ABC's allowance for doubtful accounts and compares it to the estimate provided by ABC's management.The purpose for this procedure is to substantiate which of the following assertions?

Sources of information used for determining substantive procedures include which of the following?

When the client has a large number of relatively small accounts receivable and the assessed level of control risk for receivables and related revenue transactions is high,the auditor is more likely to use negative confirmations.

A review of the terms of client debt agreements assists the audit of the presentation and disclosure assertion for accounts receivable.

The revenue cycle considered by auditors includes the sales process but not cash collections.

Negative confirmations are considered to be more persuasive than positive confirmations.

Monitoring is one of the five components of the COSO internal control framework.

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

Sales transactions should be documented at initiation in order to do which of the following?

Which of the following is the best example of the control objective in the revenue cycle that all transactions are recorded accurately?

An example of a test for completeness in the revenue cycle includes the sampling of shipping documents and tracing them to the sales journal and general ledger.

The auditor's determination that day's sales in accounts receivable increased from 44 days to 100 days would usually be found through the use of ratio analysis.

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

If control risk is assessed high,the auditor may send significantly fewer confirmations for a sample of accounts receivable than if the control risk is assessed low.

Which of the following is a control that may be implemented to ensure all sales that occur are recorded in the general ledger?

Which of the following must exist prior to the recognition of revenue by a company from the sale of a product?

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.

Confirmations that are sent to customers asking them to review the current balance due the client and return the letters directly to the auditor indicating whether they agree with the indicated balance,are known as

Fraud related to revenue recognition will most likely be identified by the auditor through which of the following independent situations?

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

The aged accounts receivable report is utilized by the auditor to

The auditor of the revenue cycle of ABC Company computes an estimate of ABC's allowance for doubtful accounts and compares it to the estimate provided by ABC's management.The purpose for this procedure is to substantiate which of the following assertions?

Sources of information used for determining substantive procedures include which of the following?

When the client has a large number of relatively small accounts receivable and the assessed level of control risk for receivables and related revenue transactions is high,the auditor is more likely to use negative confirmations.

A review of the terms of client debt agreements assists the audit of the presentation and disclosure assertion for accounts receivable.

The revenue cycle considered by auditors includes the sales process but not cash collections.

Negative confirmations are considered to be more persuasive than positive confirmations.

Monitoring is one of the five components of the COSO internal control framework.

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

Sales transactions should be documented at initiation in order to do which of the following?

Which of the following is the best example of the control objective in the revenue cycle that all transactions are recorded accurately?

An example of a test for completeness in the revenue cycle includes the sampling of shipping documents and tracing them to the sales journal and general ledger.

The auditor's determination that day's sales in accounts receivable increased from 44 days to 100 days would usually be found through the use of ratio analysis.

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

If control risk is assessed high,the auditor may send significantly fewer confirmations for a sample of accounts receivable than if the control risk is assessed low.

Which of the following is a control that may be implemented to ensure all sales that occur are recorded in the general ledger?

Which of the following must exist prior to the recognition of revenue by a company from the sale of a product?

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.

Confirmations that are sent to customers asking them to review the current balance due the client and return the letters directly to the auditor indicating whether they agree with the indicated balance,are known as

Fraud related to revenue recognition will most likely be identified by the auditor through which of the following independent situations?

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