Audit 7&8 study - Lecture notes 7 PDF

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audit quiz chapter 7&8 review questions...

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1. Revenues are normally considered to have been earned when: the company has substantially accomplished what it must to be entitled to the benefits 2. Sales are normally recorded on the date of: sales invoice 3. The control procedure “credit sales approved by credit department” is directed toward which assertion? Valuation/Accuracy 4. Which of the following internal control activities will most likely prevent the concealment of a cash shortage by improperly writing off a trade account receivable? Write-offs must be approved by a responsible officer…. Supporting evidence 5. A client has a separate group for its largest “preferred” customers… Send out positive confirmations on a large sample of these customers 6. Audit documentation often includes a client prepared, aged trial balance of accounts receivable as of the balance sheet date…… estimate credit losses 7. When accounts receivable are confirmed at interim date… sending negative confirms… 8. When auditing the revenue and collection cycle, auditors normally select balances to confirm from the accounts receivable listing 9. Which would be the best protection for a company that wishes to prevent the “lapping” of trade accounts receivable? Have customers send pmt directly to company dep… 10. An audit team is auditing sales transactions. One step… entries in the AR subsidiary ledger were properly invoiced 11. To conceal a theft involving receivables: sales returns 12. Which may be detected by auditors’ cutoff review and examination of sales JE… inflating sales for the year 13. When an audit team traces a sample of shipping docs to related sales invoices… shipments to customers were invoiced 14. Write offs of doubtful accounts should be approved by the treasurer 15. Cash receipts from sales on account have been misappropriated… understating the sales journal 16. MOVITS… inherent risk was particularly high for accounts receivable 17. an audit client sells 15-20 units of product annually… should inspect transactions … 18. an audit firm is testing controls with the purchasing cycle. Which would the firm most likely apply sampling… testing of OE of controls over authorization of purchase orders 19. which of the following results of analytical procedures would most likely indicate possible unrecorded liabilities: ratio of AP to total current liabilities of 3:1 to 5:1… 20. Budd purchasing agent… Purchase orders 21. Curtis maintenance supervisor … Refusal by the purchasing dept to approve the vendor 22.Clerk 3 23. Best audit procedure for determining existence of unrecorded liab… examine sample of cash disbursements in period subsequent to year-end 24. Which doesn’t appear in the acquisition and expenditure cycle? Sales returns 25. For which would the matching concept be the most appropriate? COGS 26. Audit team testing source docs in the purchasing cycle: same invoice # appears on different invoices from same vendor 27. Client’s purchasing system ends with the recording of a liability and its eventual payment… accounts payable are not materially understated

28. Which is LEAST likely to be performed before BS date: search for unrecorded liabilities 29. To determine whether AP are complete, auditors perform a test… receiving reports 30. When verifying debits to perpetual inventory recs of a nonmanu…. Invoices 31. Furniture company ordered 84 tables… personnel in the purchasing dept 32. An audit team would most likely examine the detail support for charges for… legal exp 33. Which of the following accounts would be audited in connection with a related BS account? Property tax expense...