Chap011 - Chapter 11 Accounts Receivable Notes Receivable...

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Chapter 11 - Accounts Receivable, Notes Receivable, and Revenue Chapter 11 Accounts Receivable, Notes Receivable, and Revenue True / False Questions 1. The department approving a sales transaction should be the shipping department. True False 2. Accounts receivable that are written-off should not be turned over to a collection agency. True False 3. An aged trial balance of accounts receivable may provide evidence on the adequacy of the allowance for uncollectible accounts. True False 4. Confirmation of accounts receivable by direct communication with the debtor tests the existence of accounts receivable. True False 5. Confirmation requests should contain a "business reply" envelope addressed to the auditors at the client's address. True False 6. CPAs use negative accounts receivable confirmations more frequently than positive accounts receivable confirmations. True False 7. Confirmation of accounts receivable provides some assurance that no lapping or other manipulation affecting accounts receivable is being carried on. True False 11-1
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Chapter 11 - Accounts Receivable, Notes Receivable, and Revenue 8. Analytical procedures are used by auditors to gain evidence about the adequacy of the allowance for uncollectible accounts. True False 9. When it is impossible to confirm accounts receivable, the auditors may be able to satisfy themselves as to the existence of accounts receivable by alternative procedures. True False 10. Material accounts receivable from related parties should be stated separately from other receivables. True False Multiple Choice Questions 11. To test the existence assertion for recorded receivables, an auditor would select a sample from the. A. Sales orders file. B. Customer purchase orders. C. Accounts receivable subsidiary ledger. D. Shipping documents (bills of lading) file. 12. Which of the following is least likely to be typically considered to be an alternate procedure for handling nonreplies to accounts receivable confirmations? A. Examine bills of lading. B. Physically examine items sold. C. Examine correspondence. D. Examine subsequent cash receipts. 11-2
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Chapter 11 - Accounts Receivable, Notes Receivable, and Revenue 13. Your client performed the physical count of inventory as of November 30, one month prior to year-end. Subsequently, your client closed the sales journal on 12/29/XX, two days before year end, and reported those two days' credit sales in January of the next year. Assuming the client uses a perpetual inventory system which of the following is most likely to be overstated relating to the year XX financial statements? A. Sales. B. Cash. C. Inventory. D. Accounts receivable. 14. Which of the following would be least likely to diminish the validity of evidence obtained through confirmation of accounts receivable? A. The confirmations are sent on the client's letterhead.
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Chap011 - Chapter 11 Accounts Receivable Notes Receivable...

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