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AUDITING - CHAPTERS 15 - 21 - 1 Which of the following...

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1. Which of the following would be the best protection for a company that wishes to prevent the lapping of trade accounts receivable ? a.Have customers send payments directly to the company's depository bank. b. Segregate duties so that the bookkeeper in charge of the general ledger has no access to incoming mail. c.Request that customers' payment checks be made payable to the company and addressed to the treasurer. d. Segregate duties so that no employee has access to both checks from customers and currency from daily cash receipts. 2. Which of the following statements regarding proper disclosure of accounts receivable is not correct? 3. The primary purpose of accounts receivable confirmation is to satisfy the 4 . The most reliable evidence from confirmations is obtained when they are sent a.as close to the balance sheet date as possible. b. at various times throughout the year to different sections of the sample, so that the entire sample is representative of account balances scattered throughout the year. c.several months before the year-end, so the auditor will have adequate time to perform alternate procedures if they are required. d. at various times throughout the year to the same group in the sample, so that the sample will not have a time bias. 5 . Which of the following is not an important consideration in determining the sample size of confirmations? 6. The following statements relate to the process of selecting items to include in the confirmation sample. Which of the following is not a true statement? a.With most confirmations, some type of stratification is desirable. b. In most audits, the emphasis should be on sampling equally throughout the population. c.It is important that the auditor have complete independence in choosing the accounts to be confirmed. d. It is important to sample some items from every material stratum of the population. 7 . Confirmation of individual accounts receivable balances directly with debtors will, of itself, normally provide evidence concerning the a.collectibility of the balances confirmed.
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