Chap007 - Chapter 07 - The Revenue and Collection Cycle...

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Chapter 07 - The Revenue and Collection Cycle Chapter 07 The Revenue and Collection Cycle Multiple Choice Questions 1. To be recognized, revenues must also be realized or realizable and A. Foreseeable B. Collected C. Earned D. Shipped Difficulty: Easy Source: Original 2. The SEC requires all of the following for revenue to be recognized except A. Cash is collected B. Persuasive evidence of an arrangement exists C. Delivery has occurred or services have been rendered D. The seller's price to the buyer is fixed or determinable Difficulty: Medium Source: Original 3. "Bill and Hold" refers to an arrangement where A. Sales are recorded but are not shipped B. Sales are shipped but are not recorded C. Sales are billed but not collected D. Inventory is held but not billed Difficulty: Hard Source: Original 7-1
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Chapter 07 - The Revenue and Collection Cycle 4. Custody of inventory is transferred to the shipping area upon authorization of: A. The customer order B. The shipping order C. The invoice D. The purchase order Difficulty: Easy Source: Original 5. The document that generates recording of a sale is the A. The customer order B. The shipping order C. The invoice D. The purchase order Difficulty: Medium Source: Original 6. The sum of customers' unpaid balances that is compared to the general ledger balance comes from A. A total of sales invoices B. A total of shipping orders C. The sales journal D. The accounts receivable trial balance Difficulty: Easy Source: Original 7. The file that contains sales transactions that were initiated in the system but are not yet completed is the: A. Credit check file B. Sales detail C. Inventory master D. Pending order master Difficulty: Easy Source: Original 7-2
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Chapter 07 - The Revenue and Collection Cycle 8. The assertion that auditors will probably emphasize in the revenue and collection cycle is: A. Occurrence B. Completeness C. Accuracy D. Classification Difficulty: Easy Source: Original 9. A small business owner can best offset the lack of segregation of duties by A. Creating an internal audit department B. Installing the latest computer equipment and software C. Being actively involved in the accounting process D. Relying on the external auditor to detect errors Difficulty: Medium Source: Original 10. Accountants should be under orders to record sales and accounts receivable when A. The customer's order is received B. All supporting documentation of shipping is in order C. The item has been paid for D. The terms are agreed upon Difficulty: Easy Source: Original 11. Which of the following is an example of the accuracy control assertion for sales invoices? A. Recorded sales in the sales journal are supported by invoices B. Invoices, shipping documents, and sales orders are prenumbered and the numerical sequence is checked C. Sales are recorded in the proper account D. Invoice quantities are compared to shipment and customer order quantities Difficulty: Medium Source: Original 7-3
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This note was uploaded on 05/26/2011 for the course ACCT 403 taught by Professor Mark during the Spring '10 term at Strayer.

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Chap007 - Chapter 07 - The Revenue and Collection Cycle...

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