Recording a sale while keeping the goods in your own warehouse is called:
B. bill and hold
Which of the accounts would not be included in the Revenue and Collection cycle?
B. raw materials
Custody is transferred from the warehouse to the shipping department upon authorization of the
D. shipping order
A form signed by the carrier to verify goods are shipped is called the
B. bill of lading
A fraud technique whereby someone takes a cash receipt and uses a later cash receipt from another customer to cover the first one is called
Approval of credit sales by the credit department supports the assertion of
B. valuation or allocation
Confirming accounts recievable primarily supports the assertion of
The most reliable evidence comes from
B. a blank confirmation
Which of the following responses to a confirmation request at December 31 is
B. we returned these items
Which of the following would be the best protection for a company that wishes to prevent the "lapping" of trade accounts receivable?
C. have customers send payments directly to the company's depository bank
Which of the following internal control procedures will most likely prevent the concealment of a cash shortage from the improper write-off of a trade account receivable?
B. write-off must be approved by a responsible officer after review of credit department recommendations and supporting evidence
Auditors sometimes use comparisons of ratios as audit evidence. For example, an unexplained decrease in the ratio of gross profit to sales may suggest which of the following possibilities?
D. unrecorded sales
An auditor is auditing sales transactions. One step is to vouch a sample of debit entries from the accounts receivable subsidiary ledger back to the supporting sales invoices. What would the auditor intend to establish by this step?
A. debit entries in the accounts recievable subsidiary ledger are properly supported by sales invoices
To conceal defalcations involving receivables, the auditor would expect an experienced bookkeeper to charge which of the following accounts?
C. sales returns
Which of the following responses to an accounts receivable confirmation at December 31 would cause an auditor the most concern?
B. "These goods were returned for credit on November 15th."
The audit documentation often includes a client-prepared, aged trail balance of accounts receivable as of the balance sheet date. The aging is best used by the auditor to:
C. estimate credit losses
Which of the following might be detected by an auditor's cutoff review and examination of sales journal entries for several days prior to the balances sheet date?
C. inflating sales for the year
Confirmation of individual accounts receivable balances directly with debtors, will, of itself, normally provide evidence concerning the:
C. existence of the balances confirmed
Which of the following is the best reason for pre-numbering in numerical sequences such documents as sales orders, shipping documents, and sales invoices?
C. enables personnel to check the numerical sequence for missing documents and unrecorded transactions
When a sample of customer accounts receivable is selected for vouching debits therein for existence evidence, the auditors will vouch them to:
B. sales invoices with shipping documents and customer sales invoices
In the audit of accounts receivable, the most important emphasis should be on the:
D. existence assertion
When accounts receivable are confirmed at an interim date, the auditors need not be concerned with:
B. sending negative confirmations to all the customers as of the year end date
The negative request form of accounts receivable confirmation is useful particularly when th:
C. assessed level of control risk relating to receivables is low; number
of small balances is many; proper consideration by the recipient is
When an auditor selects a sample of shipping documents and takes the tracing direction of a test to find the related sales invoice copies, the evidence is relevant for deciding if:
B. shipments to customers were invoiced
Write-off of doubtful accounts should be approved by:
A. the treasurer
If an auditor does not receive a response on an account receivable confirmation, she should do all of the following except:
A. do nothing for immaterial balances
Cash receipts from sales on accunt have been misappropriated. Which of the following acts would conceal this defalcation and be least likely to be detected by an auditor?
D. understating the sales journal
Which of the following internal control procedures most likely would deter lapping of collections from customers?
C. segregation of duties between receiving cash and posting the accounts receivable ledger