· Question 1
2 out of 2 points
Before goods are shipped on account, a properly authorized person must:
approve the customer’s credit.
approve the customer’s credit.
· Question 2
2 out of 2 points
Who is generally responsible for opening receipts when a company uses a lockbox to speed the handling of cash receipts?
Bank employees
Bank employees
· Question 3
2 out of 2 points
Credit memos are normally issued to:
adjust the customers balance to the amount owed to the company because of returned goods or an allowance.
adjust the customers balance to the amount owed to the company because of returned goods or an allowance.
· Question 4
2 out of 2 points
Most companies recognize sales revenue when:
goods are shipped.
goods are shipped.
· Question 5
2 out of 2 points
A document that initiates shipment of goods and indicates the description of the merchandise, the quantity shipped, and customer name and address is the:
bill of lading.
bill of lading.
· Question 6
2 out of 2 points
A document prepared to initiate shipment of the goods sold by an independent shipper is the:
bill of lading.
bill of lading.
· Question 7
2 out of 2 points
Generally, when is the earliest point in the sales and collection cycle in which revenue can be recognized?
When the goods have been shipped
When the goods have been shipped
· Question 8
2 out of 2 points
When designing audit procedures, tracing of source documents to the customers subsidiary ledger and subsequently to the general ledger is done to satisfy what assertion?
Completeness
Completeness
· Question 9
2 out of 2 points
The audit procedure referred to as proof of cash receipts is particularly useful to test:
whether all recorded cash receipts have been deposited in the bank.
whether all recorded cash receipts have been deposited in the bank.
· Question 10
2 out of 2 points
What critical event must take place before goods can be shipped in order to assure payment can be reasonably expected?
Credit approval
Credit approval
· Question 11
2 out of 2 points
The document that requires adjustments to the customers subsidiary ledger account is the:
credit memo.
credit memo.
· Question 12
2 out of 2 points
Some companies have customers send payments directly to an address maintained by a bank. This is called a(n) ________ system.
lockbox
lockbox
· Question 13
2 out of 2 points
Which of the following is not one of the five classes of transactions included in the sales and collection cycle?
Interest Income
Interest Income
· Question 14
2 out of 2 points
The document used to indicate to the customer the amount of a sale and payment due date is the:
:
sales invoice.
sales invoice.
· Question 15
2 out of 2 points
A ________ is a document that is matched with the customer order to assure that the correct quantity and type of goods are shipped.
sales order
sales order
· Question 16
2 out of 2 points
When the auditor goes through a population and selects items using nonprobabilistic selection methods, without regard to their size, source, or other distinguishing characteristics, it is called:
haphazard selection.
haphazard selection.
· Question 17
2 out of 2 points
When using statistical sampling, the auditor would most likely require a smaller sample if the:
desired reliability decreases.
desired reliability decreases.
· Question 18
2 out of 2 points
The process which requires the calculation of an interval and then selects the items based on the size of the interval is:
systematic sample selection.
systematic sample selection.
· Question 19
2 out of 2 points
The acceptable risk of overreliance:
represents the auditor’s measure of sampling risk.
represents the auditor’s measure of sampling risk.
· Question 20
2 out of 2 points
Simple random sampling:
is a probabilistic sampling method.
is a probabilistic sampling method.
· Question 21
2 out of 2 points
Rodgers CPA believes that the rate of client billing errors is 4% and has established a tolerable deviation rate of 6%. In auditing client invoices Rodgers should use:
attributes sampling.
attributes sampling.
· Question 22
2 out of 2 points
Which of the following is the risk that an auditor will reach an incorrect conclusion because a sample is not representative of the population?
Sampling risk
Sampling risk
· Question 23
2 out of 2 points
Attributes sampling would be an appropriate method to use on which one of the following procedures in an audit program?
Examine a sample of duplicate sales invoices for credit approval by the credit manager.
Examine a sample of duplicate sales invoices for credit approval by the credit manager.
· Question 24
To determine if a sample is truly representative of the population, an auditor would be required to:
audit the entire population.
audit the entire population.
· Question 25
Which of the following occurrences would be least likely to warrant further audit attention for the auditor?
Deviations from client’s budgeted values
Deviations from client’s budgeted values
· Question 26
One of the causes of nonsampling risk is:
ineffective audit procedures.
ineffective audit procedures.
· Question 27
2 out of 2 points
Which of the following is the risk that audit tests will not uncover existing exceptions in a sample?
Nonsampling risk
Nonsampling risk
· Question 28
2 out of 2 points
The advantage of systematic sample selection is that:
it is easy to use.
it is easy to use.
· Question 29
2 out of 2 points
Which of the following is the exception rate that the auditor expects to find before testing?
Estimated population exception rate
Estimated population exception rate
· Question 30
2 out of 2 points
There are three phases in both statistical and nonstatistical sampling. The first phase is to:
plan the sample.
plan the sample.