Paper Topic:

AR, NR, Revenue, Inventories, COGS, PPE Depr & Depletion

It is sometimes impossible for the auditors to use normal accounts receivable confirmation procedures . In such situations , the best alternative procedure the auditors may resort to would be

examining subsequent receipts of year-end accounts receivable

reviewing accounts receivable aging schedules prepared at the balance sheet date and at a subsequent date

requesting that management increase the allowance for uncollectible accounts by an amount equal to some percentage of the balance in those accounts that cannot be confirmed

applying analytical procedures to accounts receivable and sales on a year-to-year basis p

What type of error is the CPA most likely to discover when he examines all shipping reports dated in January , 2005 , shipped FOB shipping point which were recorded in December , 2004 , as credit sales

Accounts receivable are overstated at December 31 , 2004

Accounts receivable are understated at December 31 , 2004

Operating expenses are overstated for the twelve months ended December 31 , 2004

Sales returns and allowances are overstated at December 31 , 2004

Which of the following is consistent with effective internal control over sales transactions

The accounting department prepares a shipping report authorizing the shipment of goods

The accounting department accounts for all receiving reports

The billing department accounts for all shipping documents

The accounts payable department annually approves the extension of credit to customers

The auditors obtain audit evidence for accounts receivable by using positive or negative confirmation requests . Under which of the following circumstances might the negative form of the accounts receivable confirmation be useful

A substantial number of accounts are in dispute

The combination of inherent risk and control risk is high

Client records include a large number of relatively small balances

The auditors believe that recipients of the requests are unlikely to give them consideration

You were surprised to note that approximately 95 of returned positive accounts receivable confirmations indicated that the customers reported that they owed a larger balance than the amount that had been printed by your client on the confirmation . This might be explained by the fact that

the cash receipts journal was closed before year-end

the cash receipts journal was held open after year-end

there are many unrecorded liabilities

the sales journal was held open after year-end

Which of the following sets of duties would ordinarily be considered to be basically incompatible in terms of good internal control

Preparation of monthly statements to customers and maintenance of the accounts payable subsidiary ledger

Posting to the general ledger and approval of additions and terminations relating to payroll

Custody of unmailed signed checks and maintenance of the expense subsidiary ledger

Collection of receipts on account and maintaining accounts receivable records

Which of the following generally provides the least evidence regarding the valuation of accounts receivable

Reviewing an aging of accounts receivable

Examination of cash receipts subsequent to the balance sheet date

Confirming current (0-30 day ) year-end accounts receivable

Reviewing credit s for selected accounts

A CPA examines a sample of copies of December and January sales invoices for the initials of the person who verified...

7 pages

53.0 KB

Free sing-up