EBK AUDITING AND ASSURANCE SERVICES
16th Edition
ISBN: 9780134067117
Author: Hogan
Publisher: VST
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Chapter 23, Problem 7RQ
To determine
Explain the reason for which the auditors are not much concerned about the client’s cash receipts cut-off than the cut-off for sales and explain the procedure involved in testing for the cutoff for cash receipts.
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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.
Why are auditors usually less concerned about the client’s cashreceipts cutoff than the cutoff for sales? Explain the procedure involved in testing for thecutoff for cash receipts.
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.
Chapter 23 Solutions
EBK AUDITING AND ASSURANCE SERVICES
Ch. 23 - Explain the relationships among the initial...Ch. 23 - Prob. 2RQCh. 23 - Prob. 3RQCh. 23 - Prob. 4RQCh. 23 - Prob. 5RQCh. 23 - Prob. 6RQCh. 23 - Prob. 7RQCh. 23 - Prob. 8RQCh. 23 - Prob. 9RQCh. 23 - Prob. 10RQ
Ch. 23 - Prob. 11RQCh. 23 - Prob. 12RQCh. 23 - Prob. 13RQCh. 23 - Prob. 14.1MCQCh. 23 - Prob. 14.2MCQCh. 23 - Prob. 14.3MCQCh. 23 - Prob. 15.1MCQCh. 23 - Prob. 15.2MCQCh. 23 - Prob. 15.3MCQCh. 23 - Prob. 16.1MCQCh. 23 - Prob. 16.2MCQCh. 23 - Prob. 16.3MCQCh. 23 - Prob. 17DQPCh. 23 - Prob. 18DQPCh. 23 - Prob. 19DQPCh. 23 - Prob. 20DQPCh. 23 - Prob. 21DQPCh. 23 - You are doing the first-year audit of Sherman...Ch. 23 - Prob. 23DQPCh. 23 - McNeil Company, a medium-sized manufacturer of...Ch. 23 - The amount of subjectivity involved in...
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.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.arrow_forwardWhich of the following fraudulent activities most likely could be perpetrated due to the lack of effective internal controls in the revenue cycle? a. Fictitious transactions may be recorded that cause an understatement of revenues and overstatement of receivables b. Claim received from customers for goods returned may be intentionally recorded in other customer’s accounts. c. Authorization of credit memos by personnel who receive cash may permit the misappropriation of cash d. The failure to prepare shipping documents may cause an overstatement of inventory balancesarrow_forwardExplain why a comparison of sales and inventory records would reveal a situation in which cash sales are not being recorded and cash from those sales is being stolen.arrow_forward
- 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_forwardWhat is the importance of cash discounts to the client and howcan the auditor verify whether they are being taken in accordance with company policy?arrow_forwardImagine that you were auditing accounts receivable balances to confirm sales and found significant discrepancies between the recorded account balances and returned confirmations from customers. Recommend an alternative approach to confirming sales revenue. Provide a rationale for your recommendation.arrow_forward
- An auditor wishes to perform tests of controls on a client's cash disbursements procedures. If the control activities leave evidence, the auditor most likely will test the activities by Multiple Choice confirmation and observation. inquiry and analytical procedures. observation and inquiry. analytical procedures and confirmation. 13arrow_forwardWhen it comes to auditing, how can an auditor tell whether a customer is taking advantage of corporate policies when it comes to cash discounts?arrow_forwardAccounting 1. The auditor spends significant time auditing cash discounts and sales returns because A. management needs to authorize these transactions. B. these transactions reduce income. C. the materiality is higher. D. the risk of transactions being recorded to conceal stolen cash is higher.arrow_forward
- How does cash control deficiencies affect the development of audit procedures for cash?arrow_forwardIn an audit of cash receipts, fraud detection is often a primary focus. It's up to the auditor to decide whether this is consistent or not with their responsibilities. Explain.arrow_forwardQuestion 38 Which of the following tests of details most likely would help an auditor determine whether accounts payable have been misstated? Examining purchase returns that appear too low. Examining vendor statements for amounts not reported as purchases. Searching for customer-returned goods that were not reported as returns Reviewing bank transfers recorded as cash received from customers.arrow_forward
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