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1.

value:

10.00 points
When auditors select a sample of shipping documents and scan for missing numbers and trace them
to related sales invoices which control
objective is being tested?
Authorization.
Accounting.
Completeness.
Validity.
References
Multiple ChoiceLearning Objective: 11-02 Describe the auditor's control risk assessment and
control tests for auditing control over customer credit approval, delivery, accounts receivable, cash
receipts, and bank statements.

2.
value:

10.00 points
What is the best reason for prenumbering, in sequence, documents such as sales orders, shipping
documents and sales invoices?
Enables determination of the accuracy of each document.
Enables determination of the proper period recording of sales revenue and receivables.
Enables determination of the validity of recorded transactions.
Allows checking of the numerical sequence for missing documents and unrecorded transactions.
References
Multiple ChoiceLearning Objective: 11-02 Describe the auditor's control risk assessment and
control tests for auditing control over customer credit approval, delivery, accounts receivable, cash
receipts, and bank statements.

3.
value:

10.00 points
The cut-off bank statement is
A statement that is cut-off or produced by the bank at year-end.
A complete bank statement including all paid cheques and deposit slips for a 10 to 20 day period
following the reconciliation
date sent directly to the auditors.
Never used by the auditors but a tool used by the client to close the bank account one month before
year to ensure the last
month's transactions are all properly posted.

Provides a clear picture of the cut-off procedures used by the client to ensure the integrity of the
year-end bank reconciliation.
References
Multiple ChoiceLearning Objective: 11-07 Describe the audit of bank statement reconciliations and
how auditors identify accounts receivable lapping and suspicious cash transactions.

4.
value:

10.00 points
The listing of the detailed accounts receivable balance is called the
Accounts Payable listing.
Working trial balance.
Aged A/R trial balance.
Accounts receivable subsidiary ledger.
References
Multiple ChoiceLearning Objective: 11-01 Describe the revenues, receivables, and receipts
process, including typical risks, transactions, account balances, source documents, and controls.

5.
value:

10.00 points
Evidence of the existence and ownership of accounts receivable can obtained by
Enquiry.
All of these choices.
Computation.
Confirmation.
References
Multiple ChoiceLearning Objective: 11-05 Explain the importance of the existence assertion for the
audit of cash and accounts receivable.

6.
value:

10.00 points
Accounts receivable confirmations provide:
Evidence there are no errors in inventory cut-off.
An easy way of making sure that customers are not missing in the companys accounting records.
Evidence of the existence and valuation of the accounts receivable.
Evidence of the completeness of accounts receivable.
References
Multiple ChoiceLearning Objective: 11-06 Identify considerations for using confirmations when
auditing cash and accounts receivable.

7.
value:

10.00 points

The sales cut-off audit procedure deals with what important issues?
Inventory valuation.
Accounts receivable valuation.
The validity of accounts receivable.
Accounting for sales in the proper period.
References
Multiple ChoiceLearning Objective: 11-02 Describe the auditor's control risk assessment and
control tests for auditing control over customer credit approval, delivery, accounts receivable, cash
receipts, and bank statements.

8.
value:

10.00 points
The evidence gathering methods to be used describes the
Extent of the substantive procedures.
Timing of the substantive procedures.
Nature of the substantive procedures.
Objective of the substantive procedures.
References
Multiple ChoiceLearning Objective: 11-03 Explain how the auditor's risk assessment procedures
and control testing link to the key assertions and audit objectives in designing a substantive audit
program for the cash account balance.

9.
value:

10.00 points
If management chooses overly aggressive revenue recognition policies, risks related to which
assertions may arise?
Existence and ownership.
Presentation and completeness.
Presentation and existence.
Completeness and ownership.
References
Multiple ChoiceLearning Objective: 11-01 Describe the revenues, receivables, and receipts
process, including typical risks, transactions, account balances, source documents, and controls.

10.
value:

10.00 points
What types of ratio analysis might assist in the confirmation of the existence of accounts receivable?
Return on assets.
Gross profit margins.
Sales returns and allowances as a percentage of sales.
Credits sales growth year over year.
References

Multiple ChoiceLearning Objective: 11-05 Explain the importance of the existence assertion for the
audit of cash and accounts receivable.

11.
value:

10.00 points
Which of the following does not describe the substantive audit program?
Summarizes the audit findings.
Provides reference to the audit file pages where the work is documented.
Records auditors final conclusion based on the evidence obtained.
Documents any walk-throughs performed during the control testing.
References
Multiple ChoiceLearning Objective: 11-03 Explain how the auditor's risk assessment procedures
and control testing link to the key assertions and audit objectives in designing a substantive audit
program for the cash account balance.

12.
value:

10.00 points
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 shipments to customers were invoiced.
If shipments to customers were recorded as sales.
If recorded sales were shipped.
If invoiced sales were shipped.
References
Multiple ChoiceLearning Objective: 11-02 Describe the auditor's control risk assessment and
control tests for auditing control over customer credit approval, delivery, accounts receivable, cash
receipts, and bank statements.

13.
value:

10.00 points
What is an important tool for assessing the existence, completeness, and valuation assertions of
accounts receivable?
The aged accounts receivable trial balance.
Gross profit and profitability reviews by management.
The cash receipts journal to see that all customers are current and up to date.
The bank reconciliation.
References
Multiple ChoiceLearning Objective: 11-01 Describe the revenues, receivables, and receipts
process, including typical risks, transactions, account balances, source documents, and controls.

14.

value:

10.00 points
Who should prepare the bank reconciliations?
The auditor only to make sure it accurate and complete.
The company's accountant.
Someone other than the accountant such as the office manager.
The auditor together with the client to ensure that it's accurate.
References
Multiple ChoiceLearning Objective: 11-07 Describe the audit of bank statement reconciliations and
how auditors identify accounts receivable lapping and suspicious cash transactions.

15.
value:

10.00 points
The substantive test of selecting a sample of shipping documents and tracing them to sales invoices
is related to which assertion?
Completeness.
Existence.
Presentation.
Ownership.
References
Multiple ChoiceLearning Objective: 11-04 Describe the typical substantive procedures used to
address the assessed risk of material misstatement in the main account balances and transaction in
the revenues, receivables, and receipts process.

16.
value:

10.00 points
When accounts receivable are confirmed at an interim date, the auditors are not concerned with
which of the following?
Sending negative confirmations to all the customers as of the year-end date.
Obtaining a summary of receivables transactions form the interim date to the year-end date.
Obtaining a year-end trial balance of receivables, comparing it with the interim trial balance, and
obtaining evidence and
explanations for large variations.
Considering the necessity for some additional confirmations as of the balance sheet date if balances
have increased materially.
References
Multiple ChoiceLearning Objective: 11-06 Identify considerations for using confirmations when
auditing cash and accounts receivable.

17.
value:

10.00 points

The negative request form of accounts receivable confirmation is most likely to be acceptable in
which case?
Control risk is assessed as high, the number of small balances is few and the recipients of the
confirmations are likely to
respond.
Control risk is assessed as low, the number of small balances is many and the recipients of the
confirmations are likely to
respond.
Control risk is assessed as high, the number of small balances is few and the recipients of the
confirmations are likely to
respond.
Control risk is assessed as low, the number of small balances is few and the recipients of the
confirmations are unlikely to
respond.
References
Multiple ChoiceLearning Objective: 11-06 Identify considerations for using confirmations when
auditing cash and accounts receivable.

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