Question 1

Which of the following control activities may prevent the failure to bill customers for some shipments?

Accepted Answer

A)   Each shipment should be supported by a prenumbered sales invoice that is accounted for.
B)   Each sales order should be approved by authorized personnel.
C)   Sales journal entries should be reconciled to daily sales summaries.
D)   Each sales invoice should be supported by a shipping document.

Question 2

A remittance advice is used to track purchases.

Accepted Answer

A) True 
 B)False

Question 3

Which one of the following would the auditor consider to be an incompatible operation if the cashier receives remittances from the mailroom?

Accepted Answer

A)   The cashier prepares the daily deposit.
B)   The cashier makes the daily deposit at a local bank.
C)   The cashier posts the receipts to the accounts receivable subsidiary ledger cards.
D)   The cashier endorses the checks.

Question 4

An auditor confirms a representative number of open accounts receivable as of December 31 and investigates respondents' exceptions and comments.By this procedure,the auditor would be most likely to learn about which of the following?

Accepted Answer

A)   One of the cashiers has been covering a personal embezzlement by lapping.
B)   One of the sales clerks has not been preparing charge slips for credit sales to family and friends.
C)   One of the EDP control clerks has been removing all sales invoices applicable to his account from the data file.
D)   The credit manager has misappropriated remittances from customers whose accounts have been written-off.

Question 5

What inherent risk factors should an auditor consider when auditing the revenue process of a computer manufacturer?

Accepted Answer

The auditor will want to consider indust...

Question 6

Alpha Company uses its sales invoices for posting perpetual inventory records.Inadequate control activities over the invoicing function allow goods to be shipped that are not invoiced.The inadequate control activities could cause an

Accepted Answer

A)   understatement of revenues, receivables, and inventory.
B)   overstatement of revenues and receivables and an understatement of inventory.
C)   understatement of revenues and receivables and an overstatement of inventory.
D)   overstatement of revenues, receivables, and inventory.

Question 7

Tracing bills of lading to sales invoices provides evidence that

Accepted Answer

A)   chipments to customers were properly authorized.
B)   recorded sales were shipped.
C)   billed sales were shipped.
D)   shipments to customers were billed.

Question 8

During a review of a small business entity's internal control system,the auditor discovered that the accounts receivable clerk approves credit memos and has access to cash.Which of the following controls would be most effective in offsetting this weakness?

Accepted Answer

A)   The owner reviews errors in billings to customers and postings to the subsidiary ledger.
B)   A controller receives the monthly bank statement directly and reconciles the checking accounts.
C)   The owner reviews credit memos before they are recorded.
D)   The controller reconciles the total of the detailed accounts receivable accounts to the amount shown in the ledger.

Question 9

When comparing prices and terms on a sample of sales invoices with the authorized price list and terms of trade,the auditor is testing the ____________ assertion.

Accepted Answer

A)   cutoff
B)   authorization
C)   occurrence
D)   completeness

Question 10

An auditor selects a sample from the file of shipping documents to determine whether invoices were prepared.This test is performed to assess the assertion of

Accepted Answer

A)   authorization and accuracy.
B)   completeness.
C)   cutoff.
D)   occurrence.

Question 11

Mill Company uses a batch processing method to process its sales transactions.Data on Mill's sales transaction tapes are electronically sorted by customer number and are subjected to programmed edit checks in preparing its invoices,sales journals,and updated customer account balances.One of the direct outputs of the creation of these tapes most likely would be a

Accepted Answer

A)   report showing exceptions and control totals.
B)   printout of the updated inventory records.
C)   report showing overdue accounts receivable.
D)   printout of the sales price master file.

Question 12

An auditor's purpose in reviewing credit ratings of customers with delinquent accounts receivable most likely is to obtain evidence concerning management's assertions about

Accepted Answer

A)   valuation and allocation.
B)   completeness.
C)   existence.
D)   rights and obligations.

Exam 10: Auditing the Revenue Process

An auditor confirms a representative number of open accounts receivable as of December 31 and investigates respondents' exceptions and comments.By this procedure,the auditor would be most likely to learn about which of the following?

Correct Answer
verified

An auditor selects a sample from the file of shipping documents to determine whether invoices were prepared.This test is performed to assess the assertion of

Correct Answer
verified

A remittance advice is used to track purchases.

Correct Answer
verified

Which one of the following would the auditor consider to be an incompatible operation if the cashier receives remittances from the mailroom?

Correct Answer
verified

When comparing prices and terms on a sample of sales invoices with the authorized price list and terms of trade,the auditor is testing the ____________ assertion.

Correct Answer
verified

An auditor's purpose in reviewing credit ratings of customers with delinquent accounts receivable most likely is to obtain evidence concerning management's assertions about

Correct Answer
verified

Tracing bills of lading to sales invoices provides evidence that

Correct Answer
verified

Which of the following control activities may prevent the failure to bill customers for some shipments?

Correct Answer
verified

Alpha Company uses its sales invoices for posting perpetual inventory records.Inadequate control activities over the invoicing function allow goods to be shipped that are not invoiced.The inadequate control activities could cause an

Correct Answer
verified

During a review of a small business entity's internal control system,the auditor discovered that the accounts receivable clerk approves credit memos and has access to cash.Which of the following controls would be most effective in offsetting this weakness?

Correct Answer
verified

What inherent risk factors should an auditor consider when auditing the revenue process of a computer manufacturer?

Correct Answer
verified
The auditor will want to consider indust...
View Answer

Correct Answer
verified

Exam 10: Auditing the Revenue Process

An auditor confirms a representative number of open accounts receivable as of December 31 and investigates respondents' exceptions and comments.By this procedure,the auditor would be most likely to learn about which of the following?

Correct AnswerverifiedShow Answer

An auditor selects a sample from the file of shipping documents to determine whether invoices were prepared.This test is performed to assess the assertion of

Correct AnswerverifiedShow Answer

A remittance advice is used to track purchases.

Correct AnswerverifiedShow Answer

Which one of the following would the auditor consider to be an incompatible operation if the cashier receives remittances from the mailroom?

Correct AnswerverifiedShow Answer

When comparing prices and terms on a sample of sales invoices with the authorized price list and terms of trade,the auditor is testing the ____________ assertion.

Correct AnswerverifiedShow Answer

An auditor's purpose in reviewing credit ratings of customers with delinquent accounts receivable most likely is to obtain evidence concerning management's assertions about

Correct AnswerverifiedShow Answer

Tracing bills of lading to sales invoices provides evidence that

Correct AnswerverifiedShow Answer

Which of the following control activities may prevent the failure to bill customers for some shipments?

Correct AnswerverifiedShow Answer

Alpha Company uses its sales invoices for posting perpetual inventory records.Inadequate control activities over the invoicing function allow goods to be shipped that are not invoiced.The inadequate control activities could cause an

Correct AnswerverifiedShow Answer

During a review of a small business entity's internal control system,the auditor discovered that the accounts receivable clerk approves credit memos and has access to cash.Which of the following controls would be most effective in offsetting this weakness?

Correct AnswerverifiedShow Answer

What inherent risk factors should an auditor consider when auditing the revenue process of a computer manufacturer?

Correct AnswerverifiedThe auditor will want to consider indust...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The auditor will want to consider indust...
View Answer

Correct Answer
verified