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? a.Receivables from officers must be segregated from accounts receivable from customers if the amounts are material. b. Under SEC requirements, it is necessary to disclose sales and assets for different business segments separately. c.Proper aggregation of general ledger balances in the financial statements also requires combining account balances that are not relevant for external users. d. All accounts included in the general ledger must be disclosed separately on the financial statements. 3. The primary purpose of accounts receivable confirmation is to satisfy the a.existence objective. b. existence and cutoff objectives. c.accuracy and cutoff objectives. d. existence, accuracy, and cutoff objectives. 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? a.Total annual credit sales. b. Tolerable misstatement. c.The types of confirmations being sent; that is, positive or negative. d. The results of related analytical procedures. 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
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This note was uploaded on 02/22/2010 for the course CCA 401 taught by Professor Mohammad during the Spring '10 term at Abraham Baldwin Agricultural College.

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

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