10) Cutoff misstatements occur

D) randomly without causes related to errors or fraud.

11) How might the auditor determine whether a client has limited rights to accounts receivable?

A) Review minutes from board of directors meetings Inquiries of the client Yes Yes

B) Review minutes from board of directors meetings Inquiries of the client No No

C) Review minutes from board of directors meetings Inquiries of the client YesNo

D) Review minutes from board of directors meetings Inquiries of the client No Yes

12) You are reviewing sales to discover cutoff problems. If the client's policy is to record sales when title to the merchandise passes to the buyer, then the books and records would contain errors if the December 31 entries were for sales recorded

A) before the merchandise was shipped.

B) at the time the merchandise was shipped.

C) several days subsequent to shipment.

D) at a time after the point at which title passed.

13) The net realizable value of accounts receivable is equal to:

A) gross accounts receivable less allowance for uncollectible accounts.

B) gross accounts receivable less bad debt expense.

C) gross accounts receivable less returns and allowances.

D) gross accounts receivable less sales discounts.

14) What typically ends the acquisitions and payment cycle?

A) issuance of a purchase requisition or request for purchase of goods/services

B) issuance of a payment on accounts payable

75) When reviewing the controls and procedures in the acquisition and payment cycle,

C) personnel who record the acquisitions should not have access to cash or other assets.

A) companies cannot record the liability for the acquisition until the invoice is received from the vendor.

B) the purchasing department has the responsibility for verifying for appropriateness of the acquisition.

D) the accounts payable department should account for all receiving reports to assure that the occurrence objective is satisfied.

76) A written purchase order is a contractual document that is

A) an offer to buy goods or services

B) not enforceable if it is not in writing.

C) prepared by the receiving department.

D) an acceptance of a vendor's catalog offer to sell.

17) Which one of the following duties should not be assigned the purchases department?

D) authorizing the acquisition of goods

A) finding the lowest cost vendor

B) reviewing vendors' catalog descriptions and prices for standardized items

C) designing the purchase order form

18) Cutoff procedures for inventory purchased should be designed by companies to assure that

C) inventory received before year-end was recorded before year-end.

A) inventory owned by the company has been received.

B) inventory included in the year-end inventory count has been paid.

D) inventory was correctly valued at year-end.

19) An inventory acquisition is received late in the afternoon of December 31 after the physical inventory is completed. If the acquisition is included in accounts payable and purchases, but excluded from inventory, the result

A) is an understatement of net earnings.

B) is an overstatement of net earnings.

C) is an overstatement of working capital.

D) is an overstatement of owner's equity.

20) When an acquisition is on an FOB origin basis, the inventory and related accounts payable must be recorded in the current period if the goods were

B) shipped on or before the balance sheet date.

A) received prior to the balance sheet date.

C) both shipped and received prior to the balance sheet date.

21) Receipt of ordered materials by the receiving department will generate the completion of a form called the

D) inventory acquisition summary.

22) ________ is normally characterized as a difficult and complex account to audit.

A) Property, plant and equipment

23) Inventory is a complex area to audit for all except which of the following reasons?

D) Inventory valuation includes few estimates.

A) Inventory is often in different locations.

B) There are several acceptable valuation methods and some entities use different methods for different types of inventory.

C) Inventory is often the largest account on the balance sheet.

24) In most manufacturing companies, the inventory and warehousing cycle begins with the

D) acquisition of raw materials for production.

A) receipt of a customer's order.

B) completion of production of a customer's order.

C) initiation of production of a customer's order.

55) ________ accumulate costs by individual jobs as material is issued into production and labor costs are incurred.

A) Just-in-time production systems

29) If an auditor were concerned with obtaining evidence about the appropriateness of the value of inventory, which of the following tests would be most appropriate?

C) confirmation of inventory held by outside parties

D) physical examination of the inventory

30) The first step in verifying the valuation of purchased inventory is in determining the valuation method used by the client. The next step is

B) determining which costs should be included in the valuation of an item of inventory.

A) determining that all inventory that is purchased is expensed through cost of goods sold.

C) determining that all inventory on hand reconciles to the perpetual inventory records.

D) determining that cut-off procedures have been adhered to prior to counting inventory.

62) The purpose of tests of controls is to provide reasonable assurance that the

B) internal control procedures are functioning as intended.

A) accounting treatment of transactions and balances is valid and proper.

C) entity has complied with GAAP disclosure requirements.

D) entity has complied with requirements of quality control.

33) In the context of an audit of financial statements, substantive tests are audit procedures that

C) are designed to test for dollar misstatements.

A) may be eliminated under certain conditions.

B) are designed to discover significant subsequent events.

D) will increase proportionately with the auditor's reliance on internal control.

34) Risk assessment procedures are performed by auditors during an audit in order to

A) determine the risk of material misstatement in the financial statements.

B) determine the amount of testing of internal control.

C) determine the extent of testing of details of balances.

D) determine the extent of testing of transactions.

35) Which of the following is an account that is not affected by the sales and collection cycle?

C) allowance for doubtful accounts

67) Which of the following is an account that is not affected by the sales and collection cycle?

C) allowance for doubtful accounts

69) What critical event must take place before goods can be shipped in order to assure payment can be reasonably expected?

A) determination of correct delivery address

C) matching of shipping document with sales invoice

D) receipt of sales order from the customer

50) Before goods are shipped on account, a properly authorized person must

C) approve the customer's credit.

D) verify that the unit price is accurate.

51) The primary emphasis in most tests of details of balances is on the

C) cash flow statement accounts.

53) Which of the following is not an important aspect of billing?

D) Credit is approved to customers for sales on account.

A) All shipments made have been billed.

B) No shipment has been billed more than once.

C) Each customer is billed for the proper amount.

54) Most companies recognize sales revenue when

B) payment is received from the customer.

D) the customer's order is received.

5) The total of the individual account balances in the accounts receivable master file should equal the

D) balance of the accounts receivable account in the general ledger.

B) balance of the sales account in the general ledger.

C) total sales less the total cash received for the period.

6) To test for recorded sales for which there were no actual shipments, the auditor vouches from the

B) sales journal to the shipping documents.

A) bill of lading to the sales journal.

C) sales journal to the accounts receivable subsidiary ledger.

D) bill of lading to the supporting customer order and sales order.

7) An effective procedure to test for unfilled shipments is to trace from the

B) shipping documents to the sales journal.

A) sales journal to the shipping documents.

C) sales journal to the accounts receivable ledger.

D) sales journal to the general ledger sales account.

9) The most important test of details of balances to determine the existence of recorded accounts receivable is

D) the confirmation of customers' balances.

A) tracing details of sales invoices to shipping documents.

B) tracing the credits in accounts receivable to bank deposits.

C) tracing sales returns entries to credit memos issued and receiving room reports.

81) The audit procedure that provides the auditor with the most appropriate evidence when performing test of details of balances for accounts receivable is

B) recalculation of the aged receivables and uncollectible accounts.

C) tracing credit memos for returned merchandise to receiving room reports.

D) tracing from shipping documents to journals to the accounts receivable ledger.

82) When should auditors not perform alternative procedures in testing the accounts receivable balance?

B) when customers do not return negative confirmation requests

A) when customers do not return positive confirmation requests

C) when confirmations are deemed to be ineffective as an audit procedure

D) when confirmations are too costly to use

51 câu tiếp KTTC1

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51 questions

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MULTIPLE CHOICE QUESTION

30 sec • 1 pt

51) Which of the following audit tests would be regarded as a test of controls?

A) comparison of the inventory pricing to vendors' invoices

B) tests of the signatures on canceled checks to board of directors' authorizations

C) tests of the additions to property, plant, and equipment by physical inspections

D) review of the specific items making up the balance in a given general ledger account

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

52) Which of the following audit tests form the basis for an auditor's report on internal control over financial reporting?

A) analytical procedures

B) tests of transactions

C) tests of controls

D) tests of details of balances

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

53) One type of shipping document is the ________, which is a written contract between the carrier and the seller of the receipt and shipment of goods.

A) sales order

B) bill of lading

C) sales invoice

D) customer order

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

44) The document used to indicate to the customer the amount of a sale and payment due date is the

A) sales invoice.

B) bill of lading.

C) purchase order.

D) sales order.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

45) Which of the following is a business function related to sales returns and allowances?

A) processing customer orders

B) writing off uncollectible accounts

C) processing and recording credit memos

D) granting credit

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

46) Which one the following procedures performed for the billing function provides evidence for the completeness assertion?

A) making sure that all shipments have been billed

B) making sure that no shipment has been billed more than twice

C) making sure that each shipment is billed at the correct amount

D) making sure that each shipment is billed to the proper customer

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

47) Which of the following test of controls is useful to test the completeness objective for cash receipts?

A) Compare shipping documents with sales records.

B) Observe endorsement of incoming checks.

C) Examine evidence that the receivable master file is reconciled to the general ledger.

D) Observe if the client reconciles the bank account.

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51 câu tiếp KTTC1

51) Which of the following audit tests would be regarded as a test of controls?

52) Which of the following audit tests form the basis for an auditor's report on internal control over financial reporting?

53) One type of shipping document is the ________, which is a written contract between the carrier and the seller of the receipt and shipment of goods.

44) The document used to indicate to the customer the amount of a sale and payment due date is the

45) Which of the following is a business function related to sales returns and allowances?

46) Which one the following procedures performed for the billing function provides evidence for the completeness assertion?

47) Which of the following test of controls is useful to test the completeness objective for cash receipts?

48) Audit procedures designed to uncover credit sales made after the client's fiscal year-end that relate to the current year being audited provide evidence for which of the following audit objectives?

10) Cutoff misstatements occur

11) How might the auditor determine whether a client has limited rights to accounts receivable?

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