Select the necessary words from the list of possibilities to complete the following statements.1. A test of the completeness of recorded sales involves tracing a sample of _2. The best evidence of collectibility of accounts receivable is examination of subsequent3.4.to recorded sales.of the accounts.Loans by a company to its officers, directors, major stockholders, or affiliates require particular attention because theseare not the results of arm's length bargaining by independent parties.Before goods are shipped on open account, the sale should be approved by the5. Aconfirmation request asks the debtor to respond in all cases.

Auditing -An official examination and confirmation of the accuracy of financial reporting is called…

essary possibi est of the completeness of recorded sales involves tracing a sample of_ e best evidence of collectibility of accounts receivable is examination of subsequent to recorded sales. of the accounts. ans by a company to its officers, directors, major stockholders, or affiliates require particular attention because these are not the results of arm's length bargaining by independent parties. fore goods are shipped on open account, the sale should be approved by the confirmation request asks the debtor to respond in all cases.

essary possibi est of the completeness of recorded sales involves tracing a sample of_ e best evidence of collectibility of accounts receivable is examination of subsequent to recorded sales. of the accounts. ans by a company to its officers, directors, major stockholders, or affiliates require particular attention because these are not the results of arm's length bargaining by independent parties. fore goods are shipped on open account, the sale should be approved by the confirmation request asks the debtor to respond in all cases.

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter9: Auditing The Revenue Cycle.

Section: Chapter Questions

Problem 28CYBK

See similar textbooks

Similar questions

Which of the following statements is correct? Select one: a. Account receivable turnover is equal to net credit sales divided by average net accounts receivable. b. Buying aged receivables from businesses and then collects the payments directly from the customers is called Allowance for uncollectible accounts. c. Auto generated document numbers is a fraud preventive method which is more efficient than physical controls. d. If the same people are responsible for a series of related accounting activities is called Segregation of Duties.
(a) Audit tests include tests of controls and substantive procedures. Substantive procedures can be divided into substantive analytical procedures, tests of balances, tests of transactions and tests of disclosures. Required: For each test in the table below, select the type of audit test it represents. T 1 Examine the financial report to determine whether all related party loans are properly presented 2 Recalculate depreciation figure 3 Trace sales recorded in the sales journal to shipping documents 4 Examine sales invoices for initials to indicate that prices and extensions have been checked 5 Check cost of closing inventory to subsequent sales prices 6 Confirm loan balances with financial institutions
Choose the one correct answer. Which of the following Test of Controls is done to examine whether purchase orders, receiving reports and vouchers are prenumbered and accounted for? *Select samples from creditors list and send creditors’ confirmation. Examine evidence of approval of unusual trade terms and discounts. Trace samples of goods received notes to the related suppliers’ invoices and entries in the purchase journal and in creditors’ ledger. Review bank statements for any unrecorded cheques payments.
a. At the stage of recording a credit sale transaction, please state the potential misstatements 3) Accounts receivable collection period can occur! Give examples of control risk corsiderations in credit sales transactions! 4) Uncollectible accounts receivable expense against net credit sales b. According to information taken from the accounting records of the manufacturing company PT. 5) Uncollectible Accounts Receivable Fee against the write-off of accounts receivable Hozutama b. In your opinion what are the implications of the ratio results for auditors in the audit strategy is as follows : done in year 5 Sth Year 4th Year 3rd Year 2nd Year 1st Year Unaudited Unaudited Unaudited Unaudited Unaudited Business Opportunities (Gross) Allowance for (14,150) IDR 535,000 IDR 295,000 IDR 265,000 IDR207,500 IDR175,000 (6,400) (5,275) (5,900) (5,400) Losses on Accounts Total Assets 2,200,000 2,700,000 1,800,000 2,050,000 1,500,000 1,750,000 1,200,000 1,400,000 1,000,000 1,200,000 Total Sales…
The following situations represent errors and frauds that could occur in financial statements.Required:State how the ratio in question would compare (higher, equal, or lower) to what the ratio should have been had the error or fraud not occurred.a. The company recorded fictitious sales with credits to sales revenue accounts and debits to accounts receivable. Inventory was reduced, and cost of goods sold was increased for the profitable “sales.” Is the current ratio higher than, equal to, or lower than what it should have been?b. The company recorded cash disbursements by paying trade accounts payable but held the checks past the year-end date, meaning that the “disbursements” should not have been shown as credits to cash and debits to accounts payable. Is the current ratio higher than, equal to, or lower than what it should have been? Consider cases in which the currentratio before the improper “disbursement” recording was (1) higher than 1:1, (2) equal to 1:1, and (3) lower than…
Which of the following will most likely provide the most assurance concerning theaccuracy balance-related objective for accounts receivable?(1) Vouch amounts in the subsidiary ledger to details on shipping documents.(2) Compare receivable turnover ratios with industry statistics for reasonableness.(3) Inquire about receivables pledged under loan agreements.(4) Assess the allowance for uncollectible accounts for reasonableness
Choose the one correct answer. You are the auditor of a company and you came upon the inspection of a transaction concerning its receivables. The company did not transfer all the significant risks and rewards of its certain accounts receivable to a bank and the bank agreed to give a cash advance to the company less any finance charges and not yet releasing an amount for a contingency on sales return transactions. Which of the following receivable financing most likely occurred? A. Factoring with recourseB. Discounting with recourseC. Assignment with notificationD. Discounting without recourseE. Factoring without recourse
1. When using the Allowance method to account for uncollectible accounts, between the income statement approach and the balance sheet approach, which is more accurate in your opinion? Fully support your answer with sound research. 2. Can the Allowance account be used to misinterpret a company's financial results? How so? Provide at least one example of how a company might accomplish this. 3. Suppose a company accepts a Note Receivable in lieu of an Accounts Receivable. How would the company record this transaction? Provide an example and related journal entry. (You may not use the examples from the textbook.)
The following are numerous management assertions associated to sales and account receivable. Account receivables are clearly described and appropriately classified. Sales return have been recorded in the relevant accounts. Sales transactions have been recorded at the correct amounts. All account receivables have been recorded Sales transactions have been recorded in the proper period. The account receivables have no lien or restriction attached. REQUIRED: State the name of assertion made by management for each of the above. Discuss TWO (2) primary components of professional skepticism.
1. For each of the following audit procedures, identify A- the type of audit evidence and B- the related audit objective. a. Ask the accounts payable clerk about procedures for verifying prices, quantities, and extensions on vendors’ invoices – b. Vouch entries in sales journal to sales invoices and related shipping documents. – c. Examine the footnotes about the company’s policies for recording revenue transactions to determine whether the disclosures are reasonable d. Examine expense voucher packages and related vendors’ invoices for approval of expense account classification. e. Add the sales journal for the month of July and trace amounts to the general ledger f. Compare the quantities on hand and unit prices on this year’s inventory count sheets with those in the preceding year as a test for large differences. g. Test the extension of unit prices times quantity on the inventory list for a sample of items, test foot the list, and compare the total to the general ledger. h. Trace…
1. You are the auditor of a company and you came upon the inspection of a transaction concerning its receivables. The company did not transfer all the significant risks and rewards of its certain accounts receivable to a bank and the bank agreed to give a cash advance to the company less any finance charges and not yet releasing an amount for a contingency on sales return transactions. Which of the following receivable financing most likely occurred? A. Factoring with recourse B. Discounting with recourse C. Assignment with notification D. Discounting without recourse E. Factoring without recourse 2. An auditor decided to render sales cut-off as part of auditing an audit client’s accounts receivable. Entries in the Sales Journal from December 16, 2016 to the subsequent period January 15, 2017 were vouched to the supporting documents. Which of the following is correct regarding the January entries? A. January sales journal entries vouched back to the…
4. Which of the following audit procedures is most appropriate to address the occurrence assertion for sales? a. Confirm receivables balances. b. Perform analytical procedures. c. Review collectability. d. Confirm cash deposits in banks.