Answer bis incorrect because bank deposits wil1 agree

Answer
Bis
incorrect because bank deposits wil1 agree with
the entries in the cash receipts journal. The theft of cash is
concealed by debiting a non-cash account when recording
cash collections.
Answers
C
and
D
are incorrect because a stolen cash collec-
tion is recorded by debiting a non-cash account and credit-

478
..........
CPA EXAMINATION REVIEWER:
AUDITING THEORY
ing accounts receivable. Thus, customers would be unaware
of the fraudulent act of the employee because the
per their records will agree with the amount provided
confirmation request.
balance
in the
43. Which of the following most likely would give the most
surance concerning the valuation and allocation assertion
accounts receivable?
as-
of
on
state·
el
w·
0
ce
the
aboU
e'I·
provt

ct!Apff;R
1
Audit Objectives , Procedures , Evidence , and Documentation
479
j\nswer
B
is incorrect because inquiring about receivables
tedged
under l~an agreements relates to presentation and
~isclosure
assertion.
Answer
D
is ~nc~rrect becaus~ ~omparing receivable turno-
ver ratios with industry stat1st1cs for l'easonableness pro-
vides evidence about the completeness assertion.
Which of the following is not a principal objective in auditing
44
· accounts receivable?
A. To determine whether receivables are carried at their net
realizable value.
B. To determine whether receivables are properly classified,
described, and disclosed in the financial statements, in-
cluding notes, in accordance with the applicable financial
reporting framework.
C.
To determine whether the entity has real claims in all re-
ceivables on the balance sheet.
D. To determine whether the accounts are collected by the
balance·sheet date.
Accounts receivable are claims against customers ansmg
from the sale of goods or services. In auditing this account,
the auditor should not anticipate collections at the balance
sheet date.