ch.7-11

1. "Bill and hold" refers to an arrangement where

• 1. sales are billed but not collected.

• 1. inventory is held but not billed.

• 1. sales are recorded but are not shipped.

• 1. sales are shipped but are not recorded.

6. The file that contains sales transactions that were initiated in the system but are not yet completed is the

• 1. pending order master.

• 1. inventory master.

• 1. credit check file.

• 1. sales detail.

6. The assertion that auditors will probably emphasize in the revenue and collection cycle is

• 0. accuracy.

• 0. classification.

• 0. completeness.

• 6. occurrence.

11. Vouching debits from a sample selection of customers' accounts receivable records to supporting sales invoices is an audit procedure designed to obtain evidence about the assertion of

• 0. occurrence.

• 0. accuracy.

• 0. completeness.

• 0. classification.

15. Confirmations of accounts receivable provide the most evidence for which of the following assertions?

• 1. rights and obligations

• 1. completeness

• 1.  existence

• 1. valuation or allocation

19. To determine whether sales transactions have been recorded in the proper accounting period, the auditor performs cutoff tests. Which of the following best describes the overall approach used when performing cutoff tests?

• 1. Confirm year-end transactions with regular customers.

• 1. Examine cash receipts in the subsequent period.

• 1. Analyze transactions occurring within a few days before and after year-end.

• 1. Ascertain that management has included in the representation letter a statement that transactions have been accounted for in the proper accounting period.

23. In determining the adequacy of the allowance for uncollectible accounts, the least valuable evidence would be obtained from

• 1. no reply to negative confirmations.

• 1. an aging schedule of past due accounts that the auditor has tested.

• 1. financial statements of individual customers.

• 1. correspondence with the client's collection agency.

23. An auditor should normally perform alternative procedures to substantiate the existence of accounts receivable when

• 1. collectability of the receivables is in doubt.

• 1. no reply to a negative confirmation request is received.

• 1. pledging of the receivables is probable.

• 1. no reply to a positive confirmation request is received.

27. In the revenue and collection cycle, the auditor checks the numerical sequence of shipping documents. This procedure is related to which of the following assertions?

• 1. valuation or allocation

• 1. completeness

• 1. existence

• 1.  rights and obligations

55. Confirmation of individual accounts receivable balances directly with debtors will, of itself, normally provide the strongest evidence concerning the

• 1. internal control over balances confirmed.

• 1. collectability of the balances confirmed.

• 1. existence of the balances confirmed.

• 1. ownership of the balances confirmed.