Download Free PDF
Download Free PDF
Download Free PDF
Paulo Peñano
This Paper
A short summary of this paper
1 Full PDF related to this paper
Download
PDF Pack
People also downloaded these PDFs
People also downloaded these free PDFs
Design of Hybrid Optical Amplifiers for High Capacity Optical Transmission
by Chu Chu
Download Free PDFView PDF
Audit Chapter 11 Accounts Receivable
11. To test the existence assertion for recorded receivables, an auditor would select a sample from the.
A. Sales orders file.
B. Customer purchase orders.
C. Accounts receivable subsidiary ledger.
D. Shipping documents (bills of lading) file
C. Accounts receivable subsidiary ledger.
12. Which of the following is least likely to be typically considered
to be an alternate procedure for handling nonreplies to accounts receivable confirmations?
A. Examine bills of lading.
B. Physically examine items sold.
C. Examine correspondence.
D. Ex
B. Physically examine items sold.
13. Your client performed the physical count of inventory as of November 30, one month prior to year-end. Subsequently, your client closed the sales journal on 12/29/XX, two days before year end, and reported those two days' credit sales in January of the
14. Which of the following would be least likely to diminish the validity of evidence obtained through confirmation of accounts receivable?
A. The confirmations are sent on the client's letterhead.
B. The confirmations are mailed to customers by the inter
A. The confirmations are sent on the client's letterhead.
15. When control risk for the existence assertion is assessed at a high level,
which of the following is a likely effect with respect to the auditors' confirmation of receivables?
A. The account balances as of year end will generally be confirmed.
B. The
A. The account balances as of year end will generally be confirmed.
16. What type of error is the CPA most likely to discover when he/she examines all shipping reports dated in January of 20X1, shipped FOB shipping point, which were recorded in December of 20X0 as credit
sales?
A. Accounts receivable are overstated at Dec
A. Accounts receivable are overstated at December 31, 20X0.
17. Which of the following is not typically considered to be an alternate procedure for handling nonreplies to accounts receivable confirmations?
A. Examine sales invoices.
B. Inclusion of the information in the engagement letter.
C. Examine correspondenc
B. Inclusion of the information in the engagement letter.
18. Which of the following fraudulent activities most likely could be perpetrated due to the lack of effective internal control over the revenue cycle?
A. Fictitious transactions may be recorded that cause an understatement of revenues and an overstatemen
C. Authorization of credit memos by personnel who receive cash may permit the misappropriation of cash.
19. A client might overstate December 31 accounts receivable balances by
dating and recording January transactions in December. Such entries recorded in which journal are most likely to achieve this end?
A. Cash receipts.
B. Payroll.
C. Purchases.
D. Sale
20. Which of the following is a likely procedure to test the adequacy of the allowance for doubtful accounts?
A. Examine cash receipts received after year-end.
B. Confirm receivables.
C. Examine dates of purchase orders.
D. Foot the receivables lead sched
A. Examine cash receipts received after year-end.
21. Which of the following is most likely to be used in determining a proper amount to be included in the allowance for doubtful accounts?
A. Accounts receivable divided by Cost of goods sold.
B. Aging of accounts receivable.
C. Cash Sales divided by Acco
B. Aging of accounts receivable.
22. For effective internal control, the billing function should not be performed
by the:
A. Sales department.
B. Accounting department.
C. Finance department.
D. Information Processing department.
23. Which procedure would be of most assistance to an auditor discovering a large credit sale that has erroneously been recorded twice?
A. Footing the sales journal.
B. Sending accounts receivable confirmations.
C. Tracing the total sales in the sales jou
B. Sending accounts receivable confirmations.
24. An audit basically consists of having the auditor form an opinion regarding management's financial statement assertions. The auditor therefore develops general and specific program steps to apply to the accounts and transactions. In a particular case,
C. Tracing sales invoices to shipping documents to test the occurrence of reported sales.
26. Analytical procedures performed during an audit indicate that accounts receivable doubled since the end of the prior year. However, the allowance for doubtful accounts as a percentage of accounts receivable remained about the same. Which of the follow
C. The client opened a second retail outlet during the current year and its credit sales approximately equaled the older outlet.
27. After the CPAs have selected particular accounts receivable for confirmation:
A. As a control measure, the CPAs should carefully list the audited values of all of
those accounts before turning the letters over to the client to type and mail.
B. It is
C. All requests for confirmation should be mailed in envelopes bearing the CPA firm's return address and should include a return envelope addressed to the CPA firm.
28. Which of the following manipulations would understate receivables on the financial statements?
A. Understatement of cash sales.
B. Closing the sales journal prior to year-end.
C. Closing
the cash receipts journal prior to year-end.
D. Underestimating
B. Closing the sales journal prior to year-end.
29. You were surprised to note that approximately 95% of returned positive accounts receivable confirmations indicated that the customers thought that they owed a larger balance than the amount that had been printed by your client on the confirmation. Thi
B. The cash receipts journal was held open after year-end.
30. An auditor who uses a transaction cycle approach to assessing control risk most likely would test control activities related to transactions involving the sale of goods to customers with the
A. Collection of receivables.
B. Purchase of merchandise inv
A. Collection of receivables.
31. Which of the following fraudulent activities most likely could be perpetrated due to the lack of effective internal controls in the
revenue cycle?
A. Merchandise received is not promptly reconciled to the outstanding purchase order file.
B. Obsolete i
C. The write-off of receivables by personnel who receive cash permits the misappropriation of cash.
32. Which of the following procedures is least likely to help auditors to assess the adequacy of management's accounting estimate of the allowance for doubtful accounts?
A. Investigate confirmation exceptions for indication of
amounts in dispute.
B. Revie
B. Review accounts which have been written off as uncollectible prior to year-end.
33. Which of the following is consistent with effective internal control over sales transactions?
A. The accounting department prepares a shipping report authorizing the shipment of goods.
B. The accounting department accounts for all receiving reports.
C
C. The billing department accounts for all shipping documents.
34. Tracing recorded sales transactions to the bills of lading provides evidence about the:
A. Completeness of sales transactions.
B. Collectibility of sales transactions.
C. Occurrence of sales transactions.
D. Billing of all sales transactions.
C. Occurrence of sales transactions.
35. To obtain the best evidence regarding the completeness of recorded accounts receivable, the auditors:
A. Trace a
sample of the bills of lading to sales invoices.
B. Confirm a sample of accounts payable.
C. Review the aging of accounts receivable.
D. T
A. Trace a sample of the bills of lading to sales invoices.
36. Which of the following generally provides the least evidence regarding the valuation of accounts receivable?
A. Reviewing an aging of accounts receivable.
B. Examination of cash receipts subsequent to the balance sheet date.
C.
Confirming current (0-3
C. Confirming current (0-30 day) year-end accounts receivable.
37. Which of the following would indicate the need to use positive accounts receivable confirmations?
A. A large population consisting of small balances.
B. Good internal control over accounts receivable.
C. Most accounts are with large reputable companie
D. A large number of accounts receivable are in dispute.
38.
Which of the following is not true about the confirmation of accounts receivable?
A. Confirmation requests should bear the auditors' return address.
B. Confirmation requests should be signed by the auditors.
C. Confirmation requests should be mailed d
B. Confirmation requests should be signed by the auditors.
39. Which of the following is not true about the auditors' verification of notes receivable?
A. The interest revenue on notes
receivable is usually audited by independent computation.
B. Inspecting the notes is sufficient evidence of existence of the note
B. Inspecting the notes is sufficient evidence of existence of the notes.
41. Auditors may use positive and/or negative forms of confirmation requests for accounts receivable. Of the following, which combination is it most likely that the auditors will use?
A. The positive form for small balances, and the negative
form for larg
B. The positive form used for large balances and the negative form for the small balances.
42. The auditors obtain audit evidence for accounts receivable by using positive or negative confirmation requests. Under which of the following circumstances might the negative form of the accounts receivable confirmation be useful?
A. A substantial numb
C. Client records include a large number of relatively small balances.
43. When scheduling the audit work to be performed on an engagement, the auditors should consider confirming accounts receivable balances at an interim date if:
A. Subsequent collections are to be reviewed.
B. Internal control over receivables is good.
C.
B. Internal control over receivables is good.
44. It is sometimes impossible for the auditors to use normal accounts receivable confirmation procedures. In such
situations the best alternative procedure the auditors might resort to would be:
A. Examining subsequent receipts of year-end accounts recei
A. Examining subsequent receipts of year-end accounts receivable.
45. The audit working papers often include a client-prepared, aged trial balance of accounts receivable as of the balance sheet date. This aging is best used by the auditors to:
A. Consider internal control over credit sales.
B. Test the
accuracy of recor
C. Estimate credit losses.
46. Which of the following is not a primary objective of the auditors in the examination of accounts receivable?
A. Determine the approximate realizable value.
B. Consider the adequacy of internal control.
C. Establish the existence of receivables.
D. Det
D. Determine the expected day of collection of each of the receivables.
47. Once a CPA has
determined that accounts receivable have increased due to slow collections in a "tight money" environment, the CPA would be likely to:
A. Increase the balance in the allowance for bad debts accounts.
B. Review the going concern ramifica
D. Expand tests of collectibility.
48. Which of the following sets of duties would ordinarily be considered basically incompatible in terms of good internal control?
A. Preparation of monthly statements to
customers and maintenance of the accounts payable subsidiary ledger.
B. Posting to t
D. Collection of receipts on account and maintaining accounts receivable records.
49. Tracing copies of sales invoices to shipping documents will provide evidence that all
A. Shipments to customers were recorded as receivables.
B. Billed sales were shipped.
C. Debits to the subsidiary accounts receivable ledger are for sales shipped.
D
B. Billed sales were shipped.
50. Which of the following is the best argument against the use of negative accounts receivable confirmations?
A. The cost-per-response is excessively high.
B. There is no way of knowing if the intended recipients received them.
C. Recipients are likely t
D. The inference drawn from receiving no reply may not be correct.
51. When there are a large number of relatively small account
balances, negative confirmation of accounts receivable is feasible if the combination of inherent risk and control risk is:
A. Low, and the individuals receiving the confirmation requests are u
D. Low, and the individuals receiving the confirmation requests are likely to give them adequate consideration.
52. An auditor should perform alternative procedures to substantiate the existence of accounts receivable when:
A. No reply to a positive
confirmation request is received.
B. No reply to a negative confirmation request is received.
C. Collectibility of th
A. No reply to a positive confirmation request is received.
53. Johnson is engaged in the audit of a utility which supplies power to a residential community. All accounts receivable balances are small and internal control is effective. Customers are billed bi-monthly. In order to determine the validity of the acco
C. Send negative confirmation requests.
54. A CPA examines a sample of copies of December and January sales invoices for the initials of the person who verified the quantitative data. This is an example of a:
A. Test of a control.
B. Substantive test.
C. Cutoff test.
D. Statistical test.
56. In your review of ABC Company's financials, you note that Receivables have increased approximately 200% from the previous year, while Cash has declined. Further investigation reveals that 70% of ABC's receivables were booked within 7 days of the end o
57. Recognizing a loan received as revenue instead of as a liability has a positive effect on the reported financial statements for all of the following except:
A. It understates liabilities.
B. It overstates revenues
C. It overstates net income.
D. It ov
58. Which of the following revenue related transactions is not linked to the accounts
indicated?
A. Recognize revenues too early--accounts receivable and revenue.
B. Understate allowance for doubtful accounts--Bad debt expense, allowance for doubtful acco
C. Don't write off uncollectible receivables--sales returns, sales discounts.
59. The individual looking for guidance on revenue recognition is most likely to appropriately review:
A. APB 99.
B. SAB 104.
C. ASR 44.
D. B1 Document
60. An auditor
discovered that a client's accounts receivable turnover is substantially lower for the current year than for the prior year. This may indicate that
A. Obsolete inventory has not yet been reduced to fair market value.
B. There was an imprope
B. There was an improper cutoff of sales at the end of the year.