Introduction:
Revenue cycle is a process or an activity of a company that starts from making of the goods or services and ends with receipt of cash for making sales of goods or services.
Requirement 1
To ascertain:
List out the relevant substantive analytical procedures in the revenue cycle and explain how these procedures are related to management assertions.
Introduction:
Revenue cycle is a process or an activity of a company that starts from making of the goods or services and ends with receipt of cash for making sales of goods or services.
Requirement 2
To ascertain:
For the given procedures from 1 to 6, indicate the testing of the assertion.
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Chapter 9 Solutions
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- The auditor reviewed the shipping documents to ensure that all products included in the sales revenue to XYZ have been shipped. This is an example of: * O Classification Completeness Rights and obligations O Occurrencearrow_forwardWhich assertion is most likely being tested when an auditor vouches transactions from the sales Journal to the sales orders? a. cutoff b. rights c. completeness d. accuracyarrow_forward1. The primary objective of internal controls in the expenditure cycle is to: A. Ensure the accuracy and completeness of financial transactions B. Streamline the procurement process C. Minimize the cost of purchases D. Increase the speed of payment processing 2. An example of a preventive control in the expenditure cycle is: A.Requiring management approval for large purchases B. Regular inventory counts C. Using firewalls and intrusion detection systems D. Conducting vendor audits 3. Which of the following is an example of a processing control in the expenditure cycle? A. Document sequencing B. Reconciling the bank statement C. Physical controls over inventory D. Approval of vendor invoices 4. Purchase orders are used to initiate a payment in the disbursement cycle.True False 5. An automated approval workflow for payment processing eliminates the need for managerial oversight and authorization. True or Falsearrow_forward
- The computer processing portion of a sales order system is represented by the flowchart. Answer the following questions.a. What type of data processing system is this? Explain, and be specific.b. The auditor suggests that this system can be greatly simplified by changing to direct access files. Explain the major operational changes that would occur in the system if this were done.c. The auditor warns of control implications from this change that must be considered. Explain the nature of the control implications.d. Sketch a flowchart (the computerized portion only) of the proposed new system. Use correct symbols and label the diagram.arrow_forwardInternal controls do each of the following except: A. Evaluate performance of employees B. Guarantee the accuracy if account records C. Protect assets D. Increase the likelihood that any errors will be caughtarrow_forwardComputer accounting control procedures are referred to as general or application controls. The primary objective of application controls in a computer environment is toa. ensure that the computer system operates efficiently.b. ensure the validity, completeness, and accuracy of financial transactions.c. provide controls over the electronic functioning of the hardware.d. plan for the protection of the facilities and backup for the systems.arrow_forward
- An audit trail is a step-by-step record by which accounting data can be traced to its source. Therefore, Vouching is used primarily to test which of the following assertions about classes of transaction? Select one: a.Accuracy. b.Completeness. c. Cut-off d. Occurrencearrow_forwardThe outputs of a computerized accounting information system are called a. reports. b. software. c. processing. d. purchase invoices.arrow_forwardWhich of the following automated application controls would offer reasonable assurancethat inventory data were completely and accurately entered?a. Sequence checking.b. Batch totals.c. Limit tests.d. Check digits.arrow_forward
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