When an audit team selects a sample of shipping documents from the company's shipping logs and traces to copies of sales invoices the auditor is trying to find evidence that: Shipments to customers were invoiced Shipments to customers were recorded as sales in the sales journal Recorded sales from the sales journal were shipped. Inventory records were properly relieved.
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Question 26
When an audit team selects a sample of shipping documents from the company's shipping logs and traces to copies of sales invoices the auditor is trying to find evidence that:
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Shipments to customers were invoiced |
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Shipments to customers were recorded as sales in the sales journal |
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Recorded sales from the sales journal were shipped. |
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Inventory records were properly relieved. |
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- Question 24 The auditor is concerned that fictitious sales have been recorded. Which of the following procedures would be the best audit procedure to identify the existence of fictitious sales? Select a sample of recorded sales invoices and vouch to sales orders, shipping document (bills of lading, packing slips etc) to verify shipment of goods. Select a random sample of shipping documents and trace to sales invoices Select a sample of customer purchase orders and trace through to the generation of a sales invoice Select a sample of customer purchase orders to determine whether a valid customer exists.Question 26 The auditor selects a sample of recored sales invoices and vouches them to shipping documents. This procedure is related to which of the following assertions? Occurence Completeness Accuracy Cut-offquestion 40 A client has a separate sales group for its largest preferred customers, a select group of customers who normally make purchases in excess of $250,000 and often have balances of over $1,000,000. Whcih of the following audit procedures would the auditor most likely perform? Prepare a schedule of purchases and payments for these customers. Send out negative confirmations on a large sample of these customers. Inquire of the sales manager regarding accounts receivable items. Send out positive confirmations on a large sample of these customers.
- Question 6 To determine whether sales transactions have been recorded in the proper accounting period, the auditor performs cutoff tests. Which of the following best describes the overall approach used when performing sales cutoff tests? Ascertain that management has included in their representation letter a statement that transactions have been accounted for in the proper accounting period. Examine cash receipts in the subsequent accounting period. Confirm year-end transactions with regular customers. Analyze sales transactions occurring within a few days before and after year-end.3) Which of the following audit procedures is a test of control? a. Management providing written instruction to all employees and supervising the monthly inventory stocktake. b. Observing employee compliance with stocktake procedures. c. Picking a sample of goods received notes and ensuring the correct date is recorded in the purchase’s ledger. d. Estimating total sales for a specific product line for the year and comparing actual sales.Question 29 Which of the following is the best reason for pre-numbering in numerical sequence documents sucj as sales orders, shipping documents and sales invoices? Enables company personnel to determine accuracy of each document Enables personnel to determine the proper period recording of sales revenue and receivables Enables personnel to check numerical sequence for missing documents and unrecorded transactions Enables personnel to determine the validity of recorded transactions
- 14-22 (Objectives 14-2, 14-3) The following questions deal with internal control and audit evidence in the sales and collection cycle. Choose the best response. Tracing shipping documents to sales invoices provides evidence that sales billed to customers were actually shipped. shipments to customers were properly invoiced. Shipments to customers were recorded as sales. All goods ordered by customers were shipped. Which of the following procedures most likely represents an internal control designed to reduce the risk of errors in the billing process? Comparing control totals for shipping documents with corresponding totals for sales invoices. Matching receiving documents with approved sales orders before invoice preparation. Reconciling the control totals for sales invoices with the accounts receivable subsidiary ledger. Requiring customers that purchase on account to be approved by the credit department. An auditor wishes to test the completeness assertion for sales. Which of the…14-22 (Objectives 14-2, 14-3) The following questions deal with internal control and audit evidence in the sales and collection cycle. Choose the best response. Tracing shipping documents to sales invoices provides evidence that sales billed to customers were actually shipped. shipments to customers were properly invoiced. Shipments to customers were recorded as sales. All goods ordered by customers were shipped. Which of the following procedures most likely represents an internal control designed to reduce the risk of errors in the billing process? Comparing control totals for shipping documents with corresponding totals for sales invoices. Matching receiving documents with approved sales orders before invoice preparation. Reconciling the control totals for sales invoices with the accounts receivable subsidiary ledger. Requiring customers that purchase on account to be approved by the credit department.MULTIPLE CHOICE: 1. Which of the following is not one of the independent auditor’s objectives regarding the audit of inventories? A. Verifying that the client has used proper inventory pricing B. Verifying the inventory counted is owned by the client C. Ascertaining the physical quantities of inventory on hand D. Verifying that all inventory owned by the client is on hand at the time of the count 2. A client maintains perpetual inventory records in both quantities and pesos. If the assessed level of control risk is high an auditor will probably A. Increase the extent of tests of controls relevant to the inventory cycle B. Request the client to schedule the physical inventory count at the end of the year C. Insist that the client perform physical counts of inventory items during the year D. Apply gross profit tests to ascertain the reasonableness of the physical counts 3. To ascertain whether inventories included in the statement of financial position physically exist, a CPA will…
- Problem 7: Auditing Sales/Revenue TransactionsWhen an auditor needs to obtain an understanding of the overall internal control of a company, the auditor first needs to consider the elements of the control environment. To assist the auditor in assessing the level of control risk, the following tests of controls were designed to allow the auditor to determine if the company’srelated controls were operating effectively in the revenue cycle. Determine which of the four management assertion(s) apply to each individual sales (revenue) control being discussed. Hint: many have more than one assertion. Management Assertions: Existence & Occurrence, Rights, Completeness, Valuation 1. The company segregates the duties for authorizing, approving customer credit, shipping merchandise,…Which of the following tests is directed towards the management assertion of completeness of sales? Question 19 options: 1) Checking mathematical accuracy of invoices. 2) Vouching sales recorded to invoices held. 3) Tracing delivery documents to invoices and sales recorded. 4) Vouching invoices to delivery documents. Next PageV4. Hayden Corporation uses an enterprise resource planning (ERP) system. In their audit of receivables and revenues, the auditors have identified the following data elements in the corporation’s database that may be used for data analytics applications: Customer balance Customer credit limit and credit rating Customer total annual sales Customer purchases by date Customer returns by date Customer name Customer shipping address Required: a. Describe two data analytic applications that might be used to audit the existence of receivables and occurrence of sales. b. Describe one data analytic application that might be used to audit the valuation of receivables.