Quizziz chapter 7

To be recognized, revenues must also be realized or realizable and

• foreseeable.

• shipped.

• collected.

• earned.

The document that generates recording of a sale is the

• shipping order.

• invoice.

• customer order.

• purchase order.

Which of the following accounts is not normally part of the revenue and collection cycle?

• cash

• accounts receivable

• purchases returns and allowances

• sales

Alpha Brewery Corporation recorded sales through January 4, 2024, dating them December 31, 2023. This situation is an example of a violation of which of the following assertions?

• classification

• accuracy

• completeness

• existence or occurrence

The auditor selects a sample of recorded sales invoices and vouches them to shipping documents. This procedure is related to which of the following assertions? 

• cutoff

• accuracy

• occurrence

• completeness

Which of the following is an example of a control activity that satisfies the accuracy control objective for sales invoices?

• Sales are recorded in the proper account.

• Invoice quantities are compared to shipment and customer order quantities.

• Recorded sales in the sales journal are supported by invoices.

• Invoices, shipping documents, and sales orders are prenumbered and the numerical sequence is checked.

Sales are normally recorded on the date of the

• bill of lading.

• sales invoice.

• payment check.

• customer purchase order.

Which of the following questions included in an internal control questionnaire would evaluate the valuation objective of revenues? 

• Are sales orders prenumbered?

• Are shipping documents required before a customer invoice is sent?

• Is customer credit approved before orders are shipped?

• Are payments received from the customer deposited in the bank in a timely manner?

Which of the following controls is designed to meet the completeness assertion?

• Sales are dated by the computer to ensure it is included in the proper period.

• Sales orders are approved by the credit department prior to shipping goods.

• Prenumbering invoices, shipping documents, and sales orders.

• The sale is to a customer on the approved customer list.

Which of the following audit procedures is the most effective in testing sales for understatement?

• Vouch a sample of recorded sales from the sales journal to shipping documents.

• Analyze the aged trial balance of recorded accounts receivable.

• Confirm recorded accounts receivable.

• Trace a sample of shipping documents to sales invoices recorded in the sales journal.