Chap007

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

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Unformatted text preview: 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 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. 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. 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. 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. 7-1 Chapter 07 - The Revenue and Collection Cycle 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. 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. 8. The assertion that auditors will probably emphasize in the revenue and collection cycle is: A. Occurrence. B. Completeness. C. Accuracy. D. Classification. 9. A small business owner can best offset the lack of separation 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. 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. 7-2 Chapter 07 - The Revenue and Collection Cycle 11. Which of the following is an example of a control activity that satisfies the accuracy control objective 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. 12. Scanning sales invoices for missing numbers in the sequence would be an activity intended to satisfy what assertion?...
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Chap007 - Chapter 07 - The Revenue and Collection Cycle...

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