Auditing and Assurance Services, Student Value Edition (16th Edition)
16th Edition
ISBN: 9780134075754
Author: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Chris E. Hogan
Publisher: PEARSON
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Question
Chapter 10, Problem 21.1MCQ
To determine
Identify the fraud procedure likely to conceal the misappropriated accounts.
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Cash receipts from sales on account have been misappropriated. Which of the following acts would conceal this defalcation and be least likely to be detected by an auditor?a. Understating the sales journal.b. Overstating the accounts receivable control account.c. Overstating the accounts receivable subsidiary ledger.d. Understating the cash receipts journal.
Which of the following fraudulent activities most likely could be perpetrated due to the lack of effective internal controls in the revenue cycle?
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a. Fictitious transactions may be recorded that cause an understatement of revenues and overstatement of receivables
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b. Claim received from customers for goods returned may be intentionally recorded in other customer’s accounts.
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c. Authorization of credit memos by personnel who receive cash may permit the misappropriation of cash
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d. The failure to prepare shipping documents may cause an overstatement of inventory balances
Which of the following tests of details most likely would help an auditor determine whether accounts payable have been misstated?a. Examining reported purchase returns that appear too low.
b. Examining vendor statements for amounts not reported as purchases.
c. Searching for customer-returned goods that were not reported as returns.
d. Reviewing bank transfers recorded as cash received from customers.
Chapter 10 Solutions
Auditing and Assurance Services, Student Value Edition (16th Edition)
Ch. 10 - Prob. 1RQCh. 10 - Define misappropriation of assets and give two...Ch. 10 - Prob. 3RQCh. 10 - Prob. 4RQCh. 10 - Prob. 5RQCh. 10 - Prob. 6RQCh. 10 - Prob. 7RQCh. 10 - Prob. 8RQCh. 10 - Prob. 9RQCh. 10 - Prob. 10RQ
Ch. 10 - Prob. 11RQCh. 10 - Prob. 12RQCh. 10 - Prob. 13RQCh. 10 - Prob. 14RQCh. 10 - Prob. 15RQCh. 10 - Prob. 16RQCh. 10 - Prob. 17RQCh. 10 - Prob. 18RQCh. 10 - Prob. 19.1MCQCh. 10 - Prob. 19.2MCQCh. 10 - Prob. 19.3MCQCh. 10 - Prob. 20.1MCQCh. 10 - Prob. 20.2MCQCh. 10 - Prob. 20.3MCQCh. 10 - Prob. 21.1MCQCh. 10 - Prob. 21.2MCQCh. 10 - Prob. 21.3MCQCh. 10 - Prob. 22.1MCQCh. 10 - Prob. 22.2MCQCh. 10 - Prob. 22.3MCQCh. 10 - Prob. 23DQPCh. 10 - Prob. 24DQPCh. 10 - Prob. 25DQPCh. 10 - Prob. 27DQPCh. 10 - Prob. 28DQPCh. 10 - Prob. 29DQPCh. 10 - Prob. 31DQPCh. 10 - Each year near the balance sheet date, when the...Ch. 10 - Prob. 33DQPCh. 10 - Prob. 34DQP
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Similar questions
- The official receipt reports a higher amount of cash collected while the corresponding sales invoice being paid reported a lower amount. What possible type of fraud occurred in this case? Group of answer choices a.Not given among the given choices b.Tax fraud c.Lapping d.Abstraction of collectionarrow_forwardExplain why auditors usually emphasize the detection of fraud inthe audit of cash receipts. Is this consistent or inconsistent with the auditor’s responsibilityin the audit? Explain.arrow_forwardBesides the fraud triangle, auditors are required to consider two conditions which might lead to fraud. They are: a. Inflated sales and bill-and-hold transactions. b.Bill-and-hold transactions and embezzlement of cash. c. Improper revenue recognition and stealing of inventory. d. Management override of controls and improper revenue recognition.arrow_forward
- A common audit procedure to verify the existence assertion of cash account balances is: a. examining evidence over the authorization of cash disbursement b. examining evidence of the separation of duties between the receipts of cash payments and posting to the accounts receivable subsidiary records c. Standard Bank Confirmation form d. none of thesearrow_forwardTo conceal a theft involving receivables, a dishonest bookkeeper might charge which of the following accounts?a. Miscellaneous income.b. Petty cash.c. Miscellaneous expense.d. Sales returns.arrow_forwardWhich 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.arrow_forward
- (1) How does double-entry bookkeeping helpeliminate errors? (2) Why is accrual-based accountingconsidered more fraud-proof than cash-basedaccounting?arrow_forward1. The negative form of accounts receivable confirmation request is particularly useful except when a. Individual account balances are relatively large b. Internal control surrounding accounts receivable is considered to be effective c. A large number of small balances are involved d. The auditor has reason to believe the persons receiving the request are likely to give them consideration  2. The starting point for the verification of the balance in the general ledger account is to obtain a. A bank reconciliation from the client b. The client’s cash account from the general ledger c. A cutoff bank statement directly from the bank d. The client’s year-end bank statementarrow_forward
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