1 Which of the following accounts in a merchandising company is affected by both the revenue cycle and another cycle a Sales b Sales returns and allowances c Inventory d Accounts receivable e Accounts payable 2 The audit objective, The accounts receivable balance represents gross claims on customer...

I Inventory account in a merchatalising company is affected by both the revenue cycle and anothe ...

1. Which of the following accounts in a merchandising company is affected by both the revenue cycle...

Question:

1. Which of the following accounts in a merchandising company is affected by both the revenue cycle and another cycle?
a. Sales
b. Sales returns and allowances
c. Inventory
d. The audit objective, "The balance represents gross claims on customers and agrees with the sum of the subsidiary ledger" is derived from the assertion of:
a. Existence or occurrence
b. Completeness
c. Rights and obligations
d. Valuation or allocation
e. Presentation or disclosure
3. All sales, cash receipts, and sales adjustments are accurately valued using and correctly journalized, summarized and posted are transaction objectives for:
a. Occurrence
b. Completeness
c. Accuracy
d. Cutoff
e. Classification
4. Disclosure objectives include all of the following except:
a. Occurrence and rights and obligations
b. Cutoff
c. Completeness
d. Classification and understandability
e. Accuracy and valuation
5. The bonding of employees will normally be expected to:
a. "weed out" dishonest employees already hired
b. Eliminate the need for separation of duties in the cash receipts area
c. Guarantee that all employee fraud will be prevented
d. Provide reasonable assurance that all employees will perform their jobs with the utmost integrity
e. Serve as a deterrent to dishonesty
6. A company policy states that annual vacations are mandatory for all employees. This policy is most important for employees who:
a. Are not bonded
b. Handle cash receipts
c. Maintain the detailed accounting records
d. Have access to the general ledger
e. Serve as inventory clerks
7. A company has a policy of rotating employees' assigned duties. This policy is most important for employees who:
a. Are not bonded
b. Maintain the detailed accounting records
c. Handle cash receipts
d. Have access to the general ledger
e. Serve as inventory clerks
8. Auditors should evaluate new controls associated with all of the following except:
a. New product lines
b. New sources of revenues
c. Management's response to new accounting standards for revenue transactions
d. Related changes in personnel
e. All of the above
9. An understanding of the revenue accounting system requires knowledge of all of the following except:
a. How sales are initiated
b. How goods and services are delivered
c. How payables are recorded
d. How cash is received
e. How sales adjustments are made
10. In a credit-merchandising environment, which of the following documents usually initiates the activity in the sales cycle?
a. Shipping document
b. Customer order
c. Material requisition
d. Sales invoice
e. Sales order
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