M1-Revenue Cycle Flashcards
Upon receipt of cash, a remittance listing should be prepared. (true or false)
true
Reconciling control totals for sales invoices with the accounts receivable subsidiary ledger is not an effective control related to the billing process, since errors that exist in the preparation of invoices would likely carry through to accounts receivable. (true or false)
true
Tracing from a sample of shipping documents to matching sales invoices would provide support for the completeness assertion for billing. (true or false)
true
Shipping documents provide evidence that a sale occurred, and therefore selecting from a population of shipping documents allows the auditor to test whether corresponding invoices exist for each sale. (true or false)
true
Tracing from invoices to shipping documents would provide evidence that sales billed to customers were actually shipped. An invoice for which the corresponding shipping documents could not be located might be indicative of fictitious sales (i.e., sales that were recorded but never actually shipped). (true or false)
true
Blank forms may result in lower response rates because a greater effort is required for response. (true or false)
true
Blank forms provide a greater degree of assurance, since the recipient cannot simply sign off without checking the balance. A greater degree of assurance results in a lower assessed level of detection risk.
When using positive confirmation requests, the auditor should generally follow up with a second and sometimes third request to those parties from whom replies have not been received. In addition, asking the client to contact its customers may encourage further responses. (true or false)
true
Negative confirmations are used when the combined assessed level of inherent and control risk is low, a large number of small balances is involved, and the auditor has no reason to believe that the recipients of the requests are unlikely to give them consideration. (true or false)
true
When auditing procedures are performed before year-end, additional procedures should be performed to extend the interim conclusions to year-end. Large balances would be tested by reviewing supporting evidence, and significant changes in the balance would also be investigated. (true or false)
true
When confirming the total accounts receivable balance, it is beneficial to include a client-prepared statement of account that shows the details of the account balances so that the confirmation recipients can more easily verify the receivable balance. (true or false)
true
Sending confirmations to customers is the most appropriate audit procedure to test the existence of accounts receivable. (true or false)
true
The completeness assertion is most closely related to the completeness audit objective that verifies all sales have been recorded. (true or false)
true
Remittance advices (for customer payments) are the input document not identified in the credit sales and cash receipts system flowchart. (true or false)
true
Two assertions for which the confirmation of accounts receivable balances provides primary evidence are rights and obligations (does the client have a right to the receivable?) and existence (does the receivable really exist?). (true or false)
true
When an auditor does NOT receive replies to second requests on year-end accounts receivable confirmations, the auditor would most likely perform alternate procedures to support the existence of the receivables. These procedures include inspection of the shipping records to determine that the merchandise was actually sold to the debtors. (true or false)
true
