acct 241 ch 7

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wsrdpc
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acct 241 ch 7
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2010-08-06 12:58:19
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acct 241 ch 7
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  1. To be recognized, revenues must be
    a. realized
    b. realizable
    c. earned
    d. all of the above
    d. all of the above
  2. Recording a sale while keeping the goods in your own warehouse is called:
    A. invoice and keep
    B. recognition
    C. bill and hold
    d. none of the above
    C. bill and hold
    (this multiple choice question has been scrambled)
  3. Which of the accounts would not be included in the Revenue and Collection cycle?
    A. cash in the bank
    B. bad debt expense
    C. accounts recievable
    D. raw materials
    D. raw materials
    (this multiple choice question has been scrambled)
  4. Custody is transferred from the warehouse to the shipping department upon authorization of the
    A. invoice
    B. purchase order
    C. shipping order
    D. customer order
    C. shipping order
    (this multiple choice question has been scrambled)
  5. A form signed by the carrier to verify goods are shipped is called the
    A. bill of lading
    B. shipping order
    C. receiving report
    D. carrier form
    A. bill of lading
    (this multiple choice question has been scrambled)
  6. A fraud technique whereby someone takes a cash receipt and uses a later cash receipt from another customer to cover the first one is called
    A. kiting
    B. lapping
    C. bill and hold
    d. none of the above
    B. lapping
    (this multiple choice question has been scrambled)
  7. Approval of credit sales by the credit department supports the assertion of
    A. completeness
    B. rights and obligation
    C. existence or occurrence
    D. valuation or allocation
    D. valuation or allocation
    (this multiple choice question has been scrambled)
  8. Confirming accounts recievable primarily supports the assertion of
    A. valuation or allocation
    B. existence
    C. completeness
    D. rights and obligations
    B. existence
    (this multiple choice question has been scrambled)
  9. The most reliable evidence comes from
    A. examining a sales invoice
    B. a blank confirmation
    C. a positive confirmation
    D. a negative confirmation
    B. a blank confirmation
    (this multiple choice question has been scrambled)
  10. Which of the following responses to a confirmation request at December 31 is
    A. we are unable to confirm this account
    B. This amount was paid on December 30th
    C. we received these goods on January 4th
    D. we returned these items
    D. we returned these items
    (this multiple choice question has been scrambled)
  11. Which of the following would be the best protection for a company that wishes to prevent the "lapping" of trade accounts receivable?
    A. segregate duties so that the bookkeeper in charge of the general ledger has no access to incoming mail
    B. have customers send payments directly to the company's depository bank
    C. segregate duties so that no employee has access to both checks from customers and currency from daily cash receipts
    D. request that customers' payment checks be made payable to the company and addressed to the treasurer
    B. have customers send payments directly to the company's depository bank
    (this multiple choice question has been scrambled)
  12. Which of the following internal control procedures will most likely prevent the concealment of a cash shortage from the improper write-off of a trade account receivable?
    A. write-offs must be authorized by company field sales employees who are in a position to determine the financial standing of the customer
    B. write-offs must be supported by an aging schedule showing that only receivables overdue several months have been written off
    C. write-off must be approved by a responsible officer after review of credit department recommendations and supporting evidence
    D. write-offs must be approved by the cashier who is in a position to know if the receivables have, in fact, been collected
    C. write-off must be approved by a responsible officer after review of credit department recommendations and supporting evidence
    (this multiple choice question has been scrambled)
  13. Auditors sometimes use comparisons of ratios as audit evidence. For example, an unexplained decrease in the ratio of gross profit to sales may suggest which of the following possibilities?
    A. unrecorded sales
    B. unrecorded purchases
    C. merchandise purchases being charged to selling and general expense
    D. fictitious sales
    A. unrecorded sales
    (this multiple choice question has been scrambled)
  14. An auditor is auditing sales transactions. One step is to vouch a sample of debit entries from the accounts receivable subsidiary ledger back to the supporting sales invoices. What would the auditor intend to establish by this step?
    A. sales invoices represent bona fide sales
    B. all sales invoices have been properly posted to customer accounts
    C. all sales have been recorded
    D. debit entries in the accounts recievable subsidiary ledger are properly supported by sales invoices
    D. debit entries in the accounts recievable subsidiary ledger are properly supported by sales invoices
    (this multiple choice question has been scrambled)
  15. To conceal defalcations involving receivables, the auditor would expect an experienced bookkeeper to charge which of the following accounts?
    A. sales returns
    B. miscellaneous expense
    C. miscellaneous income
    D. petty cash
    A. sales returns
    (this multiple choice question has been scrambled)
  16. Which of the following responses to an accounts receivable confirmation at December 31 would cause an auditor the most concern?
    A. The balance does not reflect our sales discount for paying by January 5th."
    B. "We recieved this shipment on January 2nd"
    C. "These goods were returned for credit on November 15th."
    D. "This amount was paid on December 30th."
    C. "These goods were returned for credit on November 15th."
    (this multiple choice question has been scrambled)
  17. The audit documentation often includes a client-prepared, aged trail balance of accounts receivable as of the balance sheet date. The aging is best used by the auditor to:
    A. verify the existence of the recorded receivables
    B. test the accuracy of recorded charge sales
    C. estimate credit losses
    D. evaluate internal control over credit sales
    C. estimate credit losses
    (this multiple choice question has been scrambled)
  18. Which of the following might be detected by an auditor's cutoff review and examination of sales journal entries for several days prior to the balances sheet date?
    A. kiting bank balances
    B. misappropriating merchandise
    C. lapping year end accounts recievable
    D. inflating sales for the year
    D. inflating sales for the year
    (this multiple choice question has been scrambled)
  19. Confirmation of individual accounts receivable balances directly with debtors, will, of itself, normally provide evidence concerning the:
    A. existence of the balances confirmed
    B. internal control over balances confirmed
    C. ownership of the balances confirmed
    D. collectability of the balances confirmed
    A. existence of the balances confirmed
    (this multiple choice question has been scrambled)
  20. Which of the following is the best reason for pre-numbering in numerical sequences such documents as sales orders, shipping documents, and sales invoices?
    A. enables personnel to determine the proper period recording of sales revenue and receivables
    B. enables personnel to determine the occurrence of recorded transactions
    C. enables company personnel to determine the accuracy of each document
    D. enables personnel to check the numerical sequence for missing documents and unrecorded transactions
    D. enables personnel to check the numerical sequence for missing documents and unrecorded transactions
    (this multiple choice question has been scrambled)
  21. When a sample of customer accounts receivable is selected for vouching debits therein for existence evidence, the auditors will vouch them to:
    A. cash remittance lists and bank deposit slips
    B. sales invoices with shipping documents and customer sales invoices
    C. credit files and reports
    D. records of accounts receivable write-offs
    B. sales invoices with shipping documents and customer sales invoices
    (this multiple choice question has been scrambled)
  22. In the audit of accounts receivable, the most important emphasis should be on the:
    A. right and obligations assertion
    B. existence assertion
    C. presentation and disclosure assertion
    D. completeness assertions
    B. existence assertion
    (this multiple choice question has been scrambled)
  23. When accounts receivable are confirmed at an interim date, the auditors need not be concerned with:
    A. obtaining a summary of receivables transactions from the interim date to the year-end date
    B. considering the necessity for some additional confirmations as of the balance sheet date if balances have increased materially
    C. sending negative confirmations to all the customers as of the year end date
    D. obtaining a year-end trail balance of receivables, comparing it to the interm trial balance, and obtaining evidence and explainations for large variations
    C. sending negative confirmations to all the customers as of the year end date
    (this multiple choice question has been scrambled)
  24. The negative request form of accounts receivable confirmation is useful particularly when th:
    a. assessed level of control risk relating to receivables is low; number of small balances is many; proper consideration by the recipient is likely
    b. assessed level of control risk relating to receivables is low; number of small balances is few; proper consideration by the recipient is unlikely
    c. assessed level of control risk relating to receivables is high; number of small balances is few; proper consideration by the recipient is likely
    d. assessed level of control risk relating to receivables is high; number of small balances is many; proper consideration by the recipient is likely
    • a. assessed level of control risk relating to receivables is low; number
    • of small balances is many; proper consideration by the recipient is
    • likely
  25. When an auditor selects a sample of shipping documents and takes the tracing direction of a test to find the related sales invoice copies, the evidence is relevant for deciding if:
    A. recorded sales were shipped
    B. shipments to customers were recorded as sales
    C. shipments to customers were invoiced
    D. invoiced sales were shipped
    C. shipments to customers were invoiced
    (this multiple choice question has been scrambled)
  26. Write-off of doubtful accounts should be approved by:
    A. the credit manager
    B. the cashier
    C. the salesperson
    D. the treasurer
    D. the treasurer
    (this multiple choice question has been scrambled)
  27. If an auditor does not receive a response on an account receivable confirmation, she should do all of the following except:
    A. examine client correspondence files
    B. do nothing for immaterial balances
    C. examine shipping documents
    D. send a second request
    B. do nothing for immaterial balances
    (this multiple choice question has been scrambled)
  28. Cash receipts from sales on accunt have been misappropriated. Which of the following acts would conceal this defalcation and be least likely to be detected by an auditor?
    A. understating the sales journal
    B. overstating the accounts receivable control account
    C. overstating the accounts receivable subsidiary ledger
    D. understating the cash receipts journal
    A. understating the sales journal
    (this multiple choice question has been scrambled)
  29. Which of the following internal control procedures most likely would deter lapping of collections from customers?
    A. authorization of write-offs of uncollectible accounts by a supervisor independent of credit approval
    B. supervisory comparison of the daily cash summary with the sum of the cash receipt journal entires
    C. independent internal verification of dates of entry in the cash receipts journal with dates of daily cash summaries
    D. segregation of duties between receiving cash and posting the accounts receivable ledger
    D. segregation of duties between receiving cash and posting the accounts receivable ledger
    (this multiple choice question has been scrambled)

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