Question 1

Auditors must maintain control of confirmations until they are returned from the customer.

Accepted Answer

This is true as auditors need to ensure the completeness and accuracy of confirmations received from customers, which requires them to maintain control of these confirmations until they are returned.

Question 2

To determine if the client has rights to the accounts receivable on the trial balance,the auditor should inquire of management if any receivables are pledged or factored.

Accepted Answer

By inquiring about any pledges or factoring arrangements, the auditor can determine if there are any restrictions or limitations on the client's rights to the accounts receivable on the trial balance.

Question 3

Which audit procedure would be used to test for the existence balance-related audit objective?
A)Trace ten accounts from the aged trial balance to the accounts receivable master file.
B)Confirm accounts receivable.
C)Review large sales returns and allowances before and after the balance sheet date.
D)Trace ten accounts from the trial balance to the accounts on the master file.

Accepted Answer

Confirming accounts receivable directly with customers is the best audit procedure to test for the existence balance-related audit objective. It provides reliable evidence that the accounts exist and that they are valid. The other options may also provide some evidence but are not as effective as confirmation.

Question 4

The confirmations must be mailed by the auditor,but should contain the return address of the client.

Accepted Answer

Confirmations should be mailed by the auditor and contain the return address of the auditor to ensure independence and control over the confirmation process.

Question 5

The auditor is reviewing the receivables listed on the aged trial balance for notes and related party receivables.Which balance-related audit objective is he trying to satisfy?
A)detail tie-in
B)existence
C)classification
D)all of the above

Accepted Answer

The answer of The auditor is reviewing the receivables listed...

Question 6

When a customer disagrees with the amount shown on an account receivable confirmation,the auditor should not ask the client to reconcile the difference.

Accepted Answer

If a customer disagrees with the amount shown on an account receivable confirmation, the auditor should ask the client to reconcile the difference.

Question 7

Which audit procedure would the auditor use to test for the cutoff balance-related audit objective?
A)Review minutes of the board of directors meetings.
B)Review the accounts receivable trial balance for large items.
C)Use audit software to foot and cross-foot the aged trial balance.
D)Select the last 20 sales transaction from the current year's sales journal and the first 20 from the subsequent year's and trace each to the related shipping documents.

Accepted Answer

In order to test for the cutoff balance-related audit objective, the auditor would need to ensure that transactions are properly recorded in the correct period. Thus, tracing the last 20 sales transactions from the current year's sales journal and the first 20 from the subsequent year's to the related shipping documents would help ensure that the transactions are properly recorded in the correct period. Option A, B and C are not relevant to testing cutoff balance-related audit objective.

Question 8

Describe three audit procedures an auditor would use to test for the realizable value balance-related audit objective

Accepted Answer

The answer of Describe three audit procedures an auditor would...

Question 9

Each client misstatement in accounts receivable must be analyzed to determine whether it was consistent with the original assessed level of control risk.

Accepted Answer

Each misstatement in accounts receivable should be analyzed to determine if it is consistent with the original assessed level of control risk, as this will impact the nature, timing, and extent of audit procedures performed.

Question 10

To test for the completeness balance-related audit objective,the auditor should review the accounts receivable trail balance for large or unusual items.

Accepted Answer

Reviewing the accounts receivable trial balance for large or unusual items is more related to the existence or valuation objectives, not completeness. Completeness focuses on ensuring all transactions are recorded.

Question 11

When sending confirmations during most audits of accounts receivable,the emphasis is often on confirming larger and older accounts.

Accepted Answer

This is because larger and older accounts tend to have a higher risk of material misstatement, and therefore require more attention and verification.

Question 12

Match between columns
                        Premises: a listing of the balances in the accounts receivable master file at the balance sheet date broken down according to the amount of time that has passed between the date of sale and the balance sheet date
a letter,addressed to the debtor,requesting the recipient to fill in the amount of the accounts receivable balance.
the follow-up of a positive confirmation not returned by the debtor with the use of documentation evidence to determine whether the recorded receivable exists
a letter,addressed to the debtor,requesting a response only if the recipient disagrees with the amount of the stated account balance
a reported difference in a confirmation from a debtor that is determined to be a timing difference between the client's and debtor's records and therefore not a misstatement
a letter,addressed to the debtor,requesting that the recipient indicate directly on the letter whether the stated account balance is correct or incorrect and,if incorrect,by what amount
misstatements that take place as a result of current period transactions being recorded in a subsequent period or subsequent period transactions being recorded in the current period

Accepted Answer

The Answer of negative confirmation and invoice confirmation and evidence is...

Quiz 16: Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Auditors must maintain control of confirmations until they are returned from the customer.

To determine if the client has rights to the accounts receivable on the trial balance,the auditor should inquire of management if any receivables are pledged or factored.

Which audit procedure would be used to test for the existence balance-related audit objective?

The confirmations must be mailed by the auditor,but should contain the return address of the client.

The auditor is reviewing the receivables listed on the aged trial balance for notes and related party receivables.Which balance-related audit objective is he trying to satisfy?

When a customer disagrees with the amount shown on an account receivable confirmation,the auditor should not ask the client to reconcile the difference.

Which audit procedure would the auditor use to test for the cutoff balance-related audit objective?

Describe three audit procedures an auditor would use to test for the realizable value balance-related audit objective

Each client misstatement in accounts receivable must be analyzed to determine whether it was consistent with the original assessed level of control risk.

To test for the completeness balance-related audit objective,the auditor should review the accounts receivable trail balance for large or unusual items.

When sending confirmations during most audits of accounts receivable,the emphasis is often on confirming larger and older accounts.

Match seven of the terms (a-k)with the definitions provided below (1-7):