The following questions relate to the revenue, receivables, receipts cycle. Select the best response. 

a. At which point in an ordinary sales transaction of a wholesaling business would a lack of specific authorization be of least concern to the auditor in the conduct of an audit? 

1. Granting of credit. 

2. Shipment of goods. 

3. Determination of discounts. 

4. Selling of goods for cash. 

b. For an effective internal control structure, the billing function should be performed by the 

1. Accounting department. 

2. Sales department. 

3. Shipping department. 

4. Credit and collection department. 

c. When a customer fails to include a remittance advice with a payment, it is a common practice for the person opening the mail to prepare one. Consequently, mail should be opened by which of the following four company employees? 

1. Credit manager. 

2. Receptionist. 

3. Sales manager. 

4. Accounts receivable clerk.

d. Which of the following sets of duties would ordinarily be considered basically incompatible in terms of an effective internal control structure? 

1. Preparation of monthly statements to customers and maintenance of the accounts receivable subsidiary ledger. 

2. Posting to the general ledger and approval of additions and terminations relating to the payroll. 

3. Custody of unmailed signed checks and maintenance of expense subsidiary ledgers. 

4. Collection of receipts on account and maintaining accounts receivable records. 

e. Which of the following might be detected by an auditor's cutoff review and examination of sales journal entries for several days prior to and subsequent to the balance sheet date? 

1. Lapping year-end accounts receivable. 

2. Inflating sales for the year. 

3. Kiting bank balances. 

4. Misappropriating merchandise. 

f. Tracing copies of sales invoices to shipping documents will provide evidence that all 

1. Shipments to customers were recorded as receivables. 

2. Billed sales were shipped. 

3. Debits to the subsidiary accounts receivable ledger are for sales shipped. 

4. Shipments to customers were billed.