EBK AUDITING AND ASSURANCE SERVICES
16th Edition
ISBN: 9780134067117
Author: Hogan
Publisher: VST
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Chapter 18, Problem 17.4MCQ
To determine
Identify the most probable appropriate population while using confirmations to provide evidence regarding the completeness assertion for accounts payable.
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Which of the following would provide an auditor with the most reliable evidence reguarding the existence of accounts receivable?
A. A copy of the invoice sent to the customer.
B. Acopy of the customer's sales order held by the client.
C. An accounts receivable confirmation received by the auditor from the client's customer.
D. An aging schedule showing the composition of the year-end-accounts receivable balance.
2. In determining the validity of accounts receivable, which of the following would the auditor consider most reliable?
a. Direct telephone communication between the auditor and debtor
b. Confirmation replies received directly from customers
c. Credits to accounts receivable from the cash receipts book after the close of business at year end
d. Documentary evidence that supports the accounts receivable balance
The primary purpose of setting a standard confirmation request to financial institutions with which the client has done business during the year is to
a. Corroborate information regarding deposits and loan balances
b. Provide the data necessary to prepare proof of cash
c. Detect kiting activities that may otherwise not be discovered
d. Request information about contingent liabilities and secured transactions
Chapter 18 Solutions
EBK AUDITING AND ASSURANCE SERVICES
Ch. 18 - List five asset accounts, three liability...Ch. 18 - Prob. 2DQPCh. 18 - Prob. 3DQPCh. 18 - Prob. 4DQPCh. 18 - Prob. 5DQPCh. 18 - Prob. 6DQPCh. 18 - Prob. 7DQPCh. 18 - Prob. 8DQPCh. 18 - Prob. 9DQPCh. 18 - Prob. 10DQP
Ch. 18 - Prob. 11DQPCh. 18 - Prob. 13DQPCh. 18 - Prob. 14DQPCh. 18 - Prob. 15DQPCh. 18 - Prob. 16.1MCQCh. 18 - Prob. 16.2MCQCh. 18 - Prob. 16.3MCQCh. 18 - Prob. 17.1MCQCh. 18 - Prob. 17.2MCQCh. 18 - Prob. 17.3MCQCh. 18 - Prob. 17.4MCQCh. 18 - Prob. 18.3MCQCh. 18 - Prob. 18.1MCQCh. 18 - Prob. 18.2MCQCh. 18 - Prob. 19DQPCh. 18 - Prob. 20DQPCh. 18 - Prob. 21DQPCh. 18 - Prob. 22DQPCh. 18 - Prob. 23DQPCh. 18 - The following misstatements are included in the...Ch. 18 - Prob. 25DQPCh. 18 - Prob. 26DQPCh. 18 - Prob. 27DQPCh. 18 - Prob. 28DQPCh. 18 - Prob. 29DQPCh. 18 - Prob. 30C
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Similar questions
- Which of the following is the best audit procedure for determining the existence of unrecorded liabilities?a. Examine confirmation requests returned by creditors whose accounts are on a subsidiary trial balance of accounts payable.b. Examine a sample of cash disbursements in the period subsequent to year-end.c. Examine a sample of invoices a few days prior to and subsequent to the year-end to ascertain whether they have been properly recorded.d. Examine unusual relationships between monthly accounts payable and recorded purchases.arrow_forwardWhat tools do auditors use to verify the ending balances in the various accounts in the acquisition and payments cycle? Please provide reference(s).arrow_forwardAn auditor is likely to perform each of the below procedures to obtain evidence regarding the potential understatement of accounts payable at year-end (i.e., the Completeness assertion) except… Question options: Inspect purchase orders and receiving reports for accounts payable recorded at year-end. Inspect the open invoice file for invoices to be paid after year-end. All options describe procedures that can be used to identify a potential understatement of accounts payable. Analyze cash disbursements made during the first few weeks of the subsequent year and inspect supporting documentation for each disbursement.arrow_forward
- S1: The primary purpose of performing compliance tests is to provide reasonable assurance that transactions are recorded at the amounts executed. s2: The process of analyzing subsidiary ledger accounts of accounts receivable to determine those accounts which are current, past due, and collective is called analysis. s3: Most of the information included in the permanent file are accumulated during the current year's audit. A. all statements are true B. all statements are false C. S1 and S2 are true D. S1 and S3 are truearrow_forwardExplain why an auditor compares the “date of deposit accordingto the books” to the “date of disbursement according to the books” on an interbanktransfer schedule to detect kitingarrow_forwardWhich of the following procedures is MOST likely to be performed before the balance sheet date? a. Determine the date of the Letter of Representations b. Make a legal determination whether fraud has occurred. c. Search for unrecorded liabilities. d. Confirmation of receivables. e. Updating the predecessor's audit report date.arrow_forward
- STATEMENT 1: The purpose of performing compliance tests is to provide reasonable assurance that transactions are recorded at the amounts executed. STATEMENT 2: The process of analyzing subsidiary ledger accounts of accounts receivable to determine those accounts which are current, past due, and collectible is called anolysis. A. Only Statement 1 is incorrect B. Only Statement 1 is correct C. Both statements are incorrect D. Both statements are correctarrow_forwardAudit Objectives and Procedures for Accounts Receivable. In the audit of accounts receivable, auditors develop specific audit assertions related to the receivables. They then design specific substantive procedures to obtain evidence about each of these assertions.Here is a selection of accounts receivable assertions:a. Accounts receivable represent all amounts owed to the client company at the balance sheet date.b. The client company has a legal right to all accounts receivable at the balance sheet date.c. Accounts receivable are stated at net realizable value.d. Accounts receivable are properly described and presented in the financial statements.Required:For each of these assertions, select the following audit procedure (numbered 1–7) that is best suited for the audit plan. Select only one procedure for each audit objective. A procedure may be selected once, not at all, or more than once.1. Analyze the relationship of accounts receivable and sales and compare with relationships for…arrow_forwardWhich of the following audit procedures is aimed most directly at testing the completeness assertion for accounts payable? Footing the list of accounts payable. Tracing shipping reports after year-end to related customer purchase orders and invoices. Examining underlying documentation for cash disbursements in the period after year-end. Tracing shipping reports issued on or before year-end to related customer purchase orders and invoices.arrow_forward
- Dodge, CPA, is auditing the financial statements of amanufacturing company with a significant amount of trade accounts receivable. Dodgeis satisfied that the accounts are correctly summarized and classified and that allocations,reclassifications, and valuations are made in accordance with GAAP. Dodge is planningto use accounts receivable confirmation requests to obtain sufficient appropriate evidenceas to trade accounts receivable.a. Identify and describe the two forms of accounts receivable confirmation requestsand indicate what factors Dodge will consider in determining when to use each.b. Assume that Dodge has received a satisfactory response to the confirmation requests.Describe how Dodge can evaluate collectibility of the trade accounts receivable.c. What are the implications to a CPA if during an audit of accounts receivable someof a client’s trade customers do not respond to a request for positive confirmation oftheir accounts?d. What auditing steps should a CPA perform if there…arrow_forwardWhich of the following provides the highest-quality evidence regarding the Valuation of recorded accounts payable? Question 5 options: Inspecting invoices for all cash disbursements during the year. Performing analytical procedures. Confirming balances with creditors and suppliers. Recalculating the balance of accounts payable.arrow_forwardH6. Question 15 During an audit, you are selecting a sample of transactions from the vouchers payable register at the end of the period and tracing them to underlying documents. By doing this, you are gathering evidence primarily to support that: Incurred obligations were recorded in the correct period Recorded obligations were paid Recorded obligations occurred prior to year-end 1 pts Cash disbursements were recorded as incurred obligation Please show all step by step calculationarrow_forward
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