审计与保证服务：一种整合的方法(14版)题库-chapter 14 final

Chapter 14 Multiple-Choice Questions 1. Which of the following is not an account affected by the sales and collection cycle? easy a. Cash d b. Accounts receivable c. Allowance for doubtful accounts d. Gross margin 2. easy Which of the following is not one of the five classes of transactions included in the sales and collection cycle? d a. Sales returns and allowances b. Charge-off of uncollectible accounts c. Bad debt expense d. Depreciation expense 3. What event initiates a transaction in the sales and collection cycle? easy a. Receipt of cash. d b. Delivery of product to a customer. c. Identification of a new customer. d. Customer request for goods. 4. A _________ is a document that indicates a request for merchandise by a customer. easy a. sales invoice c b. vendor invoice c. customer order d. sales order 5. easy A _________ is a document that communicates the description, quantity, and related information for goods ordered by a customer. a a. sales order b. customer order c. vendor invoice d. sales invoice 6. What critical event must take place before goods can be shipped? easy a. Determination of correct delivery address b b. Credit approval c. Receipt of cash d. Receipt of sales order from the customer 7. Before goods are shipped on account, a properly authorized person must: easy a. prepare the sales invoice. c b. approve the journal entry. c. approve the customer’s credit. d. verify that the unit price is accurate. 8. A document prepared to initiate shipment of the goods sold is the: easy a. sales order. b b. bill of lading. c. sales invoice. d. customer order. 9. The document used to indicate to the customer the amount of a sale and payment due date is the: easy a. sales invoice. a b. bill of lading. c. purchase order. d. sales order. 10. At what point in the sales and collection cycle does the company first give up assets? easy a. Sales approval d b. Credit approval c. Cash collection d. Shipment of goods 11. Most companies recognize sales revenue when: easy a. sales are invoiced. c b. customer orders are received. c. goods are shipped. d. customer orders are approved. 12. Which of the following is not a business function within the “Sales” class of transactions? easy a. Processing customer orders. c b. Granting credit. c. Processing and recording sales returns and allowances. d. Shipping goods. 13. The total of the individual account balances in the accounts receivable master file equals the: easy a. total sales for the period. d b. balance of the sales account in the general ledger. c. total sales less the total cash received for the period. d. balance of the accounts receivable account in the general ledger. 14. easy A listing of amounts owed by customer which shows how long each component part has been due is the: d a. trial balance. b. working trial balance. c. accounts receivable trial balance. d. aged accounts receivable trial balance. 15. easy b A document sent to each customer showing his or her beginning accounts receivable balance and the amount and date of each sale, cash payment received, any debit or credit memo issued, and the ending balance is the: a. accounts receivable subsidiary ledger. b. monthly statement. c. remittance advice. d. sales invoice. 16. The document that accompanies the customer’s payment is the: easy a. credit memo. b b. remittance advice. c. vendor invoice. d. monthly statement. 17. The document that supports reductions in accounts receivable is the: easy a. bill of lading. c b. sales invoice. c. credit memo. d. monthly statement. 18. easy A document that initiates shipment of goods and indicates the description of the merchandise, the quantity shipped, and customer name and address is the: a a. bill of lading. b. sales invoice. c. picking ticket. d. vendor invoice. 19. When designing audit procedures, the direction of tests is a crucial step in satisfying the: easy a. valuation objective. c b. cutoff objective. c. completeness objective. d. classification objective. 20. easy Which of the following documents is not commonly associated with the “cash receipts” class of transactions? b a. Remittance advice. b. Sales order. c. Prelisting of cash receipts. d. Cash receipts journal or listing. 21. easy The process which postpones entries for the collection of receivables to conceal an existing cash shortage is referred to as: b a. kiting. b. lapping. c. floating. d. shorting. 22. easy When sales invoices are automatically calculated and posted by a computer, the auditor may be able to reduce substantive tests of transactions for which, if any, objective? a a. Accuracy b. Existence c. Completeness d. None of the above 23. easy The ____________ is a contract between a carrier (e.g., a trucking company) and the seller of goods that dictates the details surrounding the shipment of goods. a a. bill of lading b. sales invoice c. picking ticket d. remittance advice 24. easy Some companies have customers send payments directly to an address maintained by a bank. This is called a(n) _______ system. c a. direct deposit b. funds transfer c. lockbox d. interbank transfer 25. medium In many audits, no substantive tests of transactions are made for the ________ objective on the grounds that understatement of sales is not a concern. c a. accuracy b. existence c. completeness d. none of the above 26. The most important aspects of the billing function include all but which of the following? medium a. Making sure that all shipments have been billed. b b. Making sure that no shipment has been billed more than twice. c. Making sure that each shipment is billed at the correct amount. d. Making sure that each shipment is billed to the proper customer. 27. For the most part, the audit of the sales and collection cycle: medium a. cannot be performed until the audit of cash is completed. c b. must be performed first so that the audit of the other cycles can rely on the data. c. can be performed independently of the audit of other cycles. d. must be performed simultaneously with the audit of the purchases and disbursements cycle. 28. medium b An audit procedure that compares the name, amount, and dates shown on remittance advices with cash receipts journal entries and with related duplicate deposit slips would be effective in detecting: a. kiting. b. lapping. c. illicit write-offs of customers as uncollectible accounts. d. sales without proper credit authorization. 29. In which of the following will sales return and allowances not be recorded? medium a. Sales returns and allowances transaction file c b. Accounts receivable master file c. Cash receipts journal d. Sales returns and allowances will be recorded in all of the above 30. For most firms, the function of indicating credit approval is recorded on the: medium a. sales order. a b. sales invoice. c. customer order. d. remittance advice. 31. medium The document used as the basis for recording sales transactions and updating the accounts receivable master file is the: d a. sales order. b. bill of lading. c. sales journal. d. sales invoice. 32. medium When posting items from the sales journal, details of the journal and journal totals are posted to which items? c Details of the journal are posted to Journal totals are posted to a. The sales account The general ledger b. The sales account The accounts receivable subsidiary ledger c. The accounts receivable master file The general ledger d. The accounts receivable account in the general ledger The sales account in the general ledger 33. Credit memos are normally issued for what purpose(s)? medium a. To maintain control of returned merchandise. a b. To assist in the aging of accounts receivable. c. To reduce customer frustration and sales losses. d. To inform the customer of the balance due. 34. Proper auditing requires that an account receivable must be charged off by the client when: medium a. the customer files for bankruptcy. d b. the account is at least six months old. c. a collection agency cannot inspire customer to pay the debt. d. the client company concludes that an amount is no longer collectible. 35. medium Who is generally responsible for opening receipts when a company uses a lockbox to speed the handling of cash receipts? c a. Company personnel. b. Temporary employees in the town where the lockbox is located. c. Bank employees. d. Company controller. 36. A document used to indicate authority to write off an account receivable as uncollectible is the: medium a. credit memo. b b. uncollectible account authorization form. c. debit memo. d. voucher. 37. medium After the auditor has identified the key internal controls and deficiencies and assessed control risk for a private company, it is appropriate to decide whether: a a. substantive tests will be reduced sufficiently to justify costs of performing tests of controls. b. substantive tests will be increased sufficiently to justify costs of performing tests of controls. c. tests of controls will be increased sufficiently to justify costs of performing substantive tests. d. tests of controls will be reduced sufficiently to justify costs of performing substantive tests. 38. medium Management’s assertions for sales and collection activities are _____ when sales are generated via e-commerce activities. a a. unchanged b. expanded c. mitigated d. decreased 39. To prevent fraud, management should deny cash access to anyone responsible for: medium c Opening mail from customers Entering sales transactions Entering cash receipts transactions a. Yes Yes Yes b. No No Yes c. No Yes Yes d. Yes No No 40. One key internal control to prevent fictitious transactions in the sales and collection cycle is: medium a. to include a list of customer numbers in the computer files. a b. to account for the integrity of the numerical sequence of sales orders. c. to include the sales price list of all products in the computer files. d. having bank reconciliations prepared by one who is independent of the treasury function. 42. Which one of the following statements is true? In deciding on substantive tests of transactions: medium a. some procedures are commonly employed on every audit regardless of the circumstances. a b. all procedures are dependent on the adequacy of the controls and the results of the tests of controls. c. results obtained in the prior year’s audit will not affect the procedures used this year. d. the materiality of the item will not influence the choice of procedures used. 43. To test for recorded sales for which there were no actual shipments, the auditor traces from the: medium a. bill of lading to the sales journal. b b. sales journal to the bill of lading. c. sales journal to the accounts receivable subsidiary ledger. d. bill of lading to the supporting customer order and sales order. 44. An effective procedure to test for unbilled shipments is to trace from the: medium a. sales journal to the shipping documents. b b. shipping documents to the sales journal. c. sales journal to the accounts receivable ledger. d. sales journal to the general ledger sales account. 45. The auditor traces items from the source documents to the journals to satisfy the: medium a. existence objective. b b. completeness objective. c. ownership objective. d. valuation objective. 46. medium In many audits of sales transactions, no substantive tests of transactions are performed for the completeness objective because: b a. understatements of assets and income are a greater concern than overstatements. b. overstatements of assets and income are a greater concern than understatements. c. it doesn’t matter if income is understated because the savings on income tax offsets the reduced revenue and net income is correct. d. the unrecorded sales cause a reduction of accounts receivable; therefore, the ratios of the two financial statements will not be misleading. 47. medium To determine that sales are accurately recorded, the unit prices on the duplicate sales invoices are normally compared with: b a. the original invoices. b. an approved price list. c. the amounts recorded in the sales journal for that transaction. d. the amounts posted to the customer’s account in the accounts receivable master file. 48. Which of the following is a point at which the auditor deems authorization to be critical? medium a Credit granting Price authorization Shipment of goods a. Yes Yes Yes b. Yes No Yes c. No Yes No d. Yes No No 49. Prenumbered documents are intended to help: medium a Prevent the failure to bill or record sales Prevent duplicate billings or recordings of sales a. Yes Yes b. No No c. Yes No d. No Yes 50. Prenumbered documents will only be useful for control purposes if: medium a. a different numerical sequence is used for each company. b b. the sequence is accounted for periodically. c. employees are allowed to use documents out of numerical sequence. d. the same numerical sequence is used each accounting period. 51. It is important that sales be billed and recorded in the journal as soon as possible after: medium a. the order is received. d b. the order is received and credit is approved. c. credit is approved and it is verified that there is enough inventory to fill the order. d. the shipment takes place. 52. _______ tests for omitted transactions, while _____ tests for nonexistent transactions. medium a. Tracing, vouching a b. Vouching, tracing c. Verifying, tracking d. Tracking, verifying 53. The audit procedure referred to as proof of cash receipts is useful to test: medium a. time lags in making deposits. b b. whether all recorded cash receipts have been deposited in the bank. c. whether there are cash receipts that have not been recorded in the journals. d. the client’s reconciliation between cash receipts and bank deposits. 54. Which of the following procedures would ordinarily be best expected to find unrecorded sales? medium a. Compare shipping documents with sales records. a b. Apply gross profit rates to inventory disposed of during the period. c. Trace payments received subsequent to the balance sheet date. d. Send accounts receivable confirmation requests. 55. medium At which point in an ordinary sales transaction would a lack of specific authorization be of least concern to the auditor? d a. Granting of credit. b. Shipment of goods. c. Determination of discounts. d. Selling of goods for cash. 56. medium b Smith Manufacturing Company’s accounts receivable clerk has a friend who is also a Smith’s customer. The accounts receivable clerk has issued fictitious credit memos to his friend for goods supposedly returned. The most effective procedure for preventing this activity is to: a. prenumber and account for all credit memorandums. b. require receiving reports to support all credit memorandums before they are approved. c. have independent sales and accounts receivable departments. d. mail monthly statements to customers. 57. challenging Generally, audit evidence gathered from the sales and collection cycle is combined with evidence from other parts of the audit: a a. as the evidence accumulation process proceeds. b. only when all fieldwork processes of the engagement are completed. c. only after the audit of the sales and collection cycle is concluded. d. after the conclusion of both the cash cycle and the sales and collection cycle. 58. challenging Proper separation of duties is useful to prevent various types of misstatements. Which of the following is not an essential separation of duties? a a. Persons having access to cash should not have access to marketable securities. b. Separate the credit-granting function from the sales function. c. Personnel doing internal comparisons should be independent of those entering the original data. d. Anyone responsible for inputting sales and cash receipts transactions information into the computer should be denied access to cash. 59. challenging Which one of the following is not an auditor’s concern about a key authorization point in the sales/collection cycle? a a. The receiving room must have authorization before releasing items to inventory control. b. Credit must be authorized before the sale. c. Goods must be shipped after the authorization. d. Prices must be authorized. 60. challenging Transaction-related audit objectives are essentially the same for processing credit memos as for sales with certain differences. Which of the following are two key differences? d a. Risk and emphasis on the completeness objective. b. Materiality and emphasis on the accuracy objective. c. Risk and emphasis on the classification objective. d. Materiality and emphasis on the occurrence objective. 61. challenging 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 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. 62. challenging Which of the following would be the best protection for a company that wishes to prevent the “lapping” of trade accounts receivable? c a. Segregate duties so that the bookkeeper in charge of the general ledger has no access to incoming mail. b. Segregate duties so that no employee has access to both checks from customers and currency from daily cash receipts. c. Have customers send payments directly to the company’s depository bank. d. Request that customer’s payment checks be made payable to the company and addressed to the treasurer. 63. medium A proof of cash is not useful in discovering differences in the actual and reported cash balances due to: c a. deposits in transit. b. collections on the company’s behalf by the bank which are deposited directly to the company’s account. c. cash receipts that were not recorded in the relevant journals. d. service charges. 64. challenging b When designing substantive tests of transactions for sales, the auditor is concerned with the possibility of several types of misstatements. Which of the following is not one of the types of these misstatements? a. Sales being included in the journal for which no shipment was made. b. Sales to related parties, such as officers and subsidiaries. c. Sales recorded more than once. d. Shipments being made to nonexistent customers and recorded as sales. 65. challenging An auditor needs to determine whether