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4. Which of the following might be detected by an auditor's review of the client's sales cut-off?
A.Excessive goods returned for credit
B.Unrecorded sales discount
C.Lapping of year-ends accounts receivable
D.Inflated sales for the year
5. An auditor most likely would review an entity's periodic accounting for numerical sequence of
shipping documents and invoices to support management's financial statement assertion of
A.Existence or occurrence
B.Valuation
C.Right and obligation
D.Completeness
9. An auditor who has confirmed accounts receivable may discover that the sales journal was
held open past year-end if
A.Positive confirmations sent to debtor are not returned
B.Negative confirmations sent to debtors are not returned
l C.Most of the returned negative confirmations indicate that the debtor owes larger balance that
the amount being confirmed
D.Most of the returned positve confirmations indicate that the debtor owes a smaller balance
that the amount being confirmed.
10. The auditor finds situation in which one person has the ability to collect receivables,make
deposits,issue credit memos and record receipt if payments. The auditor suspects the individual
may be stealing from cash receipts. Which of the following audit procedures would be most
effective in discovering fraud in this scenario?
A.Send positive confirmations to all random selection of customers
B.Send negative confirmations to all outstanding accounts receivable customers
C.Perform a detailed review of debits to customer discounts,sales returns, or other debit
accounts excluding cash posted to the cash receipts
D.Take a sample of bank deposits and trace the detail in each bank deposit back to the entry in
the cash receipta journal
11. The positive request form of accounts receivable confirmation may be used when the
Combined Assessed Level of Inherent and Control Risk is Individual Account Receivable Balance are
A. L o w L a r g e
B. L o w S m a l l
C. H i g h S m a l l
D. H i g h L a r g e
12. The negative request form of accounts receivable confirmation may be used whan the
Combined Assessed Level of Inherent and Control Risks Number of Small Balances Is Consideration by the Recipient
A . L o w M a n y L i k e l y
B . L o w F e w U n l i k e l y
C . H i g h F e w L i k e l y
D . H i g h M a n y L i k e l y
13. Which of the following is the greatest drawback of uaing the subsequent collections
evidenced only by a deposit slip as an alternative procedure when responces to positive accounts
receivable confirmation are not received?
A.Checking of subsequent collections can never be used as an alternative auditing procedure
B. By examininy a deposit slip only,the auditor does not know whther the payment is for the
receivable at the balance sheet date or subsequent transaction
C.A depositor slip is not received directly by the auditor
D.A customer may not have made a payment in a timely basis.
15.Which of the following procedures would an auditor most likely perform for year-end
accounts receivable confirmations when the auditor did not receive repkies ti second request?
A.Review the cash receipts journal for the month prior to year-end
B.Intensify the study of internal control concerning revenue cycle
C.Increased the assessed level of detection risk for existence assertion
D.Inspect the shipping records documenting the merchandise sold to the debtors
16.An auditor should perform alternative procedures to substantiate the existence of accounts
receivable when
A.No reply to a positive confirmation request is received
B.No reply to a negative confirmation request is received
C.Collectibility of the receivables is in doubt
D.Pledging of the receivables is probable
17.An auditor's purpose in reviewing credit ratings of customers with deliquent accounts
receivable most likely is to obtain evidence concerning management's assertion about
A.Valuation or allocation
B.Presentation and disclosure
C.Existence and occurence
D.Rights and obligations
18. An aged trial balance of accounts receivable is usually used by the auditor to
A.Verify the validity of recorded receivables
B.Ensure that all accounts are promptly credited
C.Evaluate the results of compliance test
D.Evaluate type of provision for bad debt expense
19. In verifying a November 30, 2011 sales cut off date , an auditor would be most cincerned
wuth comparing records of
A.November 2011 cash receipts with December 2011 bank deposits
B.November 2011 purchases with December 2011 shipments
C.November 2011 accounts receivable with November2011 sales
D.November 2011 sales with November 2011 shipping documents
20. To conceal defalcation involving receivables, the auditor would expect an experienced
bookkeeper to charge which of the following accounts
A.Miscellaneous income
B.Petty cash
C.Miscellaneous expense
D.Sales returns