Which of the following is NOT a purpose of control accounts?O a.to identify all errors where the trial balance agreesO b.to provide a total for trade receivables and trade payablesО с.to verify the accuracy of the individual ledger accountsO d.to assist in the preparation of financial statements

Control accounts are general ledger accounts used to record similar transactions. Purpose - To…

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purpose of control accounts'

Auditing: A Risk Based-Approach to Conducting a Quality Audit

10th Edition

ISBN:9781305080577

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

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

Chapter16: Advanced Topics Concerning Complex Auditing Judgments

Section: Chapter Questions

Problem 16MCQ

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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.
An entity to which money is owed is known as a debtor and such transactions will be recorded in the trade receivables control account. Select one: True False
Discuss, using practical example the effect of prepayment figures on the preparation of a financial statement? Suggest Four reasons why there might be difference between the balance on the receivable ledger control account and the total list of the list of accounts receivable ledger balances.? Discuss, using practical example how revenue expenditure should not be capitalized ?
Which of the following is true? a. When individual customers’ accounts have credit balances of material amounts, these amounts must be deducted from the debit balance in other customers’ accounts on the statement of financial position. b. Sales revenue is increased by a recovery of an account previously written off. c. It is appropriate to measure the impairment of receivables based on recognized sales and other revenues. d. A noninterest-bearing promissory note is measured on the statement of financial position at face value less the amount of unamortized discount.
Which statement is NOT correct for an expenditure system with proper internal controls?a. Cash disbursements maintain the check register.b. Accounts payable maintains the accounts payable subsidiary ledger.c. Accounts payable is responsible for paying invoices.d. Accounts payable is responsible for authorizing invoices.
The notes receivable is debited by the bookkeeper instead of accounts receivable. What is the effect of the error in the total assets of the entity? a. No effect b. Cannot be determined based on the given information c. Understated d. Overstated
Which one of the following statements is true? a. When a company uses a subsidiary ledger, the balance in the control account, Accounts Receivable, shows only the amount the company expects to collect from the accounts receivable, net of any expected uncollectible accounts. b. An accounts receivable subsidiary ledger represents amounts due to vendors and suppliers. c. The balance in the control account, Accounts Receivable, should be equal to the sum of the balances in the subsidiary ledger for accounts receivable. d. A subsidiary ledger takes the place of the control account for some companies.
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
The following are specific balance-related audit objectives applied to the audit of accounts receivable (a. through h.) and management assertions about account balances (1 through 4). The list referred to in the specific balance-related audit objectives is the list of the accounts receivable from each customer at the balance sheet date. Specific Balance-Related Audit Objective a . There are no unrecorded receivables. b . Receivables have not been sold or discounted. c . Uncollectible accounts have been provided for. d . Receivables that have become uncollectible have been written off. e . All accounts on the list are expected to be collected within 1 year. f . The total of the amounts on the accounts receivable listing agrees with the general ledger balance for accounts receivable. g . All accounts on the list arose from the normal course of business and are not due from related parties. h . Sales cutoff at year-end is proper. Management Assertion about Account Balances 1…
A debit balance in which of the following accounts would indicate a likely error? a.Notes Payable b.Supplies c.Salaries Expense d.Accounts Receivable
Audit documentation often includes a client-prepared, aged trial balance of accounts receivable as of the balance sheet date. The audit team uses this aging primarily toa. Evaluate internal control over credit sales.b. Test the accuracy of recorded charge sales.c. Estimate credit losses.d. Verify the existence of the recorded receivables.
Answer the following questions about recording uncollectible Accounts Receivable (A/R): a) Describe both the direct write-off method and the allowance method of recognizing uncollectible accounts receivable. In your descriptions, be sure to identify the specific major difference between the approach taken for each method when recording uncollectible A/R. b) Which method is in accordance with GAAP? Discuss the reasons why the other method is not in accordance with GAAP.