EBK AUDITING AND ASSURANCE SERVICES
16th Edition
ISBN: 9780134067117
Author: Hogan
Publisher: VST
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Question
Chapter 7, Problem 26DQP
To determine
Classify each item according to the eight types of audit evidence.
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To test whether debits to accounts receivable represent valid transactions, the auditor should trace entries from the
A. Accounts receivable ledger to sales documentation.
B. Sales journal to the accounts receivable ledger.
C. Accounts receivable ledger to the cash receipts journal.
D. Cash receipts documentation to the accounts receivable ledger.
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.
The auditor has gathered the following information to test the accuracy of the
one prepared by the controller. In particular, the auditor is testing the accuracy
of the outstanding cheques. Use the following information to prepare the bank
reconciliation and calculate what the total of the outstanding cheques should
be.
1. Cash balance - March 31 $39,500 2. Outstanding Deposits $13,810
3. NSF cheque from a customer $750 4. Bank Statement Balance - March 31
$127,100
5. The bank recorded a deposit as $10,000 when the deposit was actually
$1,000
6. The bank credited the company's bank account with $3,900 of interest
earned
7. The bank statement showed an EFT from a customer for $16,300
8. The bank charged a service charge of $45
9. The company posted cheque #1730 as $890 when the actual amount was
properly debited by the bank for $980
a) Outstanding Cheques= $73,095
b) Outstanding Cheques= $76,995
c) Outstanding Cheques=$82,095
d) Outstanding Cheques= $56,795
Chapter 7 Solutions
EBK AUDITING AND ASSURANCE SERVICES
Ch. 7 - Prob. 1RQCh. 7 - Prob. 2RQCh. 7 - Prob. 3RQCh. 7 - Prob. 4RQCh. 7 - Prob. 5RQCh. 7 - Prob. 6RQCh. 7 - Prob. 7RQCh. 7 - Prob. 8RQCh. 7 - Prob. 9RQCh. 7 - Prob. 10RQ
Ch. 7 - Prob. 11RQCh. 7 - Prob. 12RQCh. 7 - Describe the liquidity activity ratios and explain...Ch. 7 - Prob. 14RQCh. 7 - Prob. 15RQCh. 7 - Prob. 16RQCh. 7 - Prob. 17RQCh. 7 - Prob. 18RQCh. 7 - Define what is meant by a tick mark. What is its...Ch. 7 - Prob. 20RQCh. 7 - Prob. 21.1MCQCh. 7 - Prob. 21.2MCQCh. 7 - Prob. 21.3MCQCh. 7 - Prob. 22.1MCQCh. 7 - Prob. 22.2MCQCh. 7 - Prob. 22.3MCQCh. 7 - Prob. 23.1MCQCh. 7 - Prob. 23.2MCQCh. 7 - Prob. 23.3MCQCh. 7 - Prob. 24.1MCQCh. 7 - Prob. 24.2MCQCh. 7 - Prob. 24.3MCQCh. 7 - Prob. 25DQPCh. 7 - Prob. 26DQPCh. 7 - Prob. 27DQPCh. 7 - Prob. 28DQPCh. 7 - Prob. 29DQPCh. 7 - Prob. 30DQPCh. 7 - Following are 10 audit procedures with words...Ch. 7 - Prob. 32DQPCh. 7 - Prob. 33DQPCh. 7 - Prob. 34DQPCh. 7 - You are auditing payroll for the Morehead...Ch. 7 - Prob. 36DQPCh. 7 - Prob. 38C
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Similar questions
- V4. 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.arrow_forwardAudit 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.arrow_forwardWhich audit procedure is most effective in testing credit sales for overstatement?(1) Trace a sample of postings from the sales journal to the sales account in thegeneral ledger.(2) Vouch a sample of recorded sales from the sales journal to shipping documents.(3) Prepare an aging of accounts receivable.(4) Trace a sample of initial sales orders to sales recorded in the sales journal.arrow_forward
- Read the following statements carefully: Recalculate the allowance of accounts receivables. Vouch sales journal entries to sales invoices. Inspect the Bank statement in the client’s file. Trace sales invoices to accounting receivable ledger. Ask the payroll department to make a report about the calculating criteria of the overtime. Inspect the disclosure of inventories in the financial statements. Ask management about inventories the client has a legal title on it. Observe that Inventory quantities include all products, materials, and supplies on hand. Instructions: 1-Indicate the type of Procedure for each statement. 2-Indicate the type of Evidence for each statement. 3-Indicate the type of Assertion for each statement. 4-Indicate the source of Document for each statement (obtained directly by the auditor, external circulated internally, internally circulated externally, entirely internal). No. Type of Procedure Type of Evidence Type of Assertion The source of…arrow_forwardCAATs Application—Receivables Confirmation. You are using computer audit software to prepare accounts receivable confirmations during the annual audit of the Eastern Sunrise Services Club. The company has the following data files:Master file—debtor credit record.Master file—debtor name and address.Master file—account detail:Ledger number.Sales code.Customer account number.Date of last billing.Balance (gross).Discount available to customer (memo account only).Date of last purchase.The discount field represents the amount of discount available to the customer if the customer pays within 30 days of the invoicing date. The discount field is cleared for expired amounts during the daily updating. You have determined that this is properly executed.Required:From the data files shown, list the information that you would include on the confirmation requests. Identify the file from which the information can be obtained.arrow_forwardTo minimize errors in the accounts payable function, which of the following procedures should be performed? approving the purchase requisition following up on open purchase orders double checking the math on the bank reconciliation matching the supplier’s invoice to the receiving reportarrow_forward
- When auditing the revenue and collection cycle, auditors normally select balances to confirm from thea. Sales journal.b. Accounts receivable listing.c. General ledger.d. Cash receipts listingarrow_forward4. Which of the following audit procedures is most appropriate to address the occurrence assertion for sales? a. Confirm receivables balances. b. Perform analytical procedures. c. Review collectability. d. Confirm cash deposits in banks.arrow_forwardAn auditors would vouch copies of sales invoices to shipping documents in order to determine that: A- Sales that are billed were also shipped B-Customer shipments were billed C-Shipments to customer were also recorded as receivables D- The subsidiary accounts receivable ledger was updatedarrow_forward
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