Auditing 2 Test #1 and quizzes - Cha pter 10 Quiz Review of...

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Cha pter 10 Quiz Review of attempt 1 Started on Sunday, January 23, 2011, 10:04 PM Completed on Sunday, January 23, 2011, 10:26 PM Time taken 21 mins 57 secs Grade 7 out of a maximum of 10 ( 70 %) Question 1 Marks: 1 Revenue is realized when a product or service is exchanged for cash or a promise to pay cash or other assets that can be converted into cash. Answer: True False correct Correct Marks for this submission: 1/1. Question 2 Marks: 1 Audit documents often include a client-prepared aged trial balance of accounts receivable as of the balance sheet date. This aging is used by the auditor to Choose one answer. a. Evaluate internal control over credit sales
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b. Test the accuracy of recorded credit sales c. Evaluate the allowance for doubtful accounts d. Verify the existence of the recorded receivables incorrect Incorrect Marks for this submission: 0/1. Question 3 Marks: 1 To reduce the risks associated with accepting e-mail responses to requests for confirmation of accounts receivable, an auditor most likely would Choose one answer. a. Request the senders to mail the original forms to the auditor or the auditor may follow up with a telephone call to verify the response correct b. Examine subsequent cash receipts for the accounts in question c. Consider the e-mail responses to the confirmations to be exceptions d. Mail second requests to the e-mail respondents Correct Marks for this submission: 1/1. Question 4 Marks: 1 In confirming accounts receivable, an auditor decided to confirm customers' account balances rather than individual invoices. Which of the following most likely would be included with the client's confirmation letter?
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Choose one answer. a. An auditor-prepared letter explaining that a nonresponse may cause an inference that the account balance is correct b. A client-prepared letter reminding the customer that a nonresponse will cause a second request to be sent c. An auditor-prepared letter requesting the customer to supply missing and incorrect information directly to the auditor d. A client-prepared statement of account showing the details of the customer's account balance correct Correct Marks for this submission: 1/1. Question 5 Marks: 1 During a review of a small business entity's internal control system, the auditor discovered that the accounts receivable clerk approves credit memos and has access to cash. Which of the following controls would be most effective in offsetting this weakness? Choose one answer. a. The owner reviews errors in billings to customers and postings to the subsidiary ledger b. A controller receives the monthly bank statement directly and reconciles the checking accounts incorrect c. The owner reviews credit memos after they are recorded
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d. The controller reconciles the total of the detailed accounts receivable accounts to the amount shown in the ledger Incorrect Marks for this submission: 0/1. Question
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This note was uploaded on 05/06/2011 for the course AUDITING 4505 taught by Professor Messier during the Spring '11 term at University of Minnesota Duluth.

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Auditing 2 Test #1 and quizzes - Cha pter 10 Quiz Review of...

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