Which of the following is not a principal objective of the auditor in the audit of revenues? - Answer-To verify cash deposited during the year.
An auditor most likely would review an entity's periodic accounting for the numerical sequence of shipping documents and invoices to support management'...
MGMT 443 Quiz 5 Exam Questions and
Answers
Which of the following is not a principal objective of the auditor in the audit of revenues?
- Answer-To verify cash deposited during the year.
An auditor most likely would review an entity's periodic accounting for the numerical
sequence of shipping documents and invoices to support management's financial
statement assertion of - Answer-Completeness
Which of the following might be detected by an auditor's review of the client's sales
cutoff? - Answer-Inflated sales for the year.
An audit client sales 15 to 20 units of product annually. A large portion of the annual
sales occur in the last month of the fiscal year. Annual sales have not materially
changed over the past 5 years. Which of the following approaches would be most
effective concerning the timing of audit procedures for revenue? - Answer-The auditor
should inspect transactions occurring in the last month of the fiscal year and review the
related sale contracts to determine that revenue was posted in the proper period.
An auditor observed that a client mails monthly statements to customers. Subsequently,
the auditor reviewed evidence of follow-up on the error reported by the customers. This
test of controls was most likely performed to support management's financial statement
assertion(s) of - Answer-Classification and understandability: No
Rights and obligations: Yes
In the audit of which of the following general ledger accounts will tests of controls be
particularly appropriate? - Answer-Sales.
If the objective of an auditor's test of details is to detect a possible understatement of
sales, the auditor most likely would trace transactions form the - Answer-Shipping
documents to the sales invoices.
A CPA auditing an electric utility wishes to determine whether all customers are being
billed. The CPA's best direction of test is from the - Answer-Meter department records to
the billing (sales) register.
If the objective of a test of details is to detect overstatements of sales, the auditor
should compare transactions in the - Answer-Accounting records with the source
documents.
, Which of the following most likely would give the most assurance concerning the
valuation assertion about accounts receivables? - Answer-Assessing the allowance for
uncollectible accounts for reasonableness.
Which of the following procedures would an auditor most likely perform for year-end
accounts receivable confirmations when the auditor did not receive replies to second
requests? - Answer-Inspect the shipping records documenting the merchandise sold to
the debtors.
Once a CPA has determined that accounts receivable have increased because of slow
collections in a tight money environment, the CPA is likely to - Answer-Expand tests of
collectibility
An auditor reconciles the total of the accounts receivable subsidiary ledger to the
general ledger account, as of October 31. By this procedure, the auditor would be most
likely to learn of which of the following? - Answer-An opening balance in a subsidiary
ledger account was improperly carried forward from the previous accounting period.
An auditor ordinarily sends a standard confirmation request to all banks which the client
has done business during the year under audit, regardless of the year-end balance. A
purpose of this procedure is to - Answer-Seek information about other deposit and loan
amounts that come to the attention of the institution in the process of completing the
confirmation.
When counting cash on hand, the auditor must exercise control over all cash and other
negotiable assets to prevent - Answer-Substitution
Which of the following cash transfers results in a misstatement of cash at December 31,
Year 1? - Answer-Bank Transfer Schedule
Disbursement Receipt
Recorded Paid by Recorded Received
in Books. Bank. in Books by Bank
1/4/Yr2. 1/5/Yr2. 12/31/Yr1 1/4/Yr2
Which of the following characteristics is most likely indicative of check kiting? - Answer-
Low average balance compared with high level of deposits.
On receiving a client's bank cutoff statement, an auditor most likely will trace - Answer-
Prior-year checks listed in the cutoff statement to the year-end outstanding checklist.
On the last day of the fiscal year, the cash disbursements clerk drew a company check
on bank A and deposited the check in the company account bank B to cover a previous
theft of cash. The disbursement has not been recorded. The auditor will best detect this
form of kiting by - Answer-Examining paid checks returned with the bank statement of
the next accounting period after year end.
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