10 Which of the following is NOT an overall ohjective of the auditor in the audit of revenue To verify cash deposits during the year To obtain an understanding of internal control and assess the risks of material misstatement, including gaining an understanding of how revenue is recorded at the entity a b. c. To verify that earned revenue has been recorded and recorded revenue has been earmed d. To identify and interpret significant trends and variations in the amounts of various categories of revenue 11. Auditors are often concerned with the possibility of overstatement of sales and receivables However, management may also have reasons for ring these balances. Which of the tollowing would explain understatement of sales To hit performance targets in order to earn bonuses To avoid payment of taxes To meet budgets and forecasts All of the answers are correct a. b. c. d. 12. Which of the following might be detected by an auditor's review of the client's sales cutoff? a. b. e. d. Excessive goods returned for credit Unrecorded sales discounts Lapping of year-end accounts receivable Inflated sales for the year uditor is assessing risks related to the revenues process at their client and identifies the following risk: "Invoices for goods sold are posted to incorrect customer accounts." Which of the following internal controls would assist in preventing or detecting errors or fraud occurring as a result of this risk? Daily sales summaries are compared with control totals for invoices a. b. Monthly statements are mailed to all customers e. Control amounts posted to the accounts receivables ledger are compared with control totals for invoices before invoices are mailed Sales orders are prepared for each customer order d. Sales invoices are compared with shipping documents and approved customer orders e