1.Which of the following is helpful in assessing the reasonableness of total revenues?

A:None of the choices is correct.

B:Sales to total assets ratio

C : Current ratio

D:Sales to capacity ratio

2.An auditor suspects that an employee misstated the discounts he issued to a business that is owned by a friend. Which of the following will also be misstated?

A:Credit sales

B:Cash receipts

C:Write-off of bad debts

D:Provision for bad debts

3.Understanding how the entity earns and recognized revenues assists the auditor in which of the following?

A:Developing an expectation of net margin

B:Assessing the control risk

C:All of the choices are correct.

D:Developing expectations of expenses

4.Which of the following could cause the timing and amount of revenue to be recognized (occurrence of revenues) to be contentious?

A:Complex accounting standards

B:All of the choices are correct.

C:The need to make estimates

D:The purchasers' rights of return

5.Proton Enterprises makes supplies and replacement parts for high-tech medical devices, and some of its products are potentially dangerous. Proton does not want certain products sent to clients who do not have the required regulatory certifications to receive them. Which of the following is the best course of action for Proton to take?

A:Proton company software matches the customer number on the sales invoice to that on the sales order.

B:Only a small number of Proton employees are permitted to change the customer master file, and management reviews all changes.

C:Proton company software matches all issued inventory to authorized sales orders.

D:A Proton employee double-checks all customer statements and notifies an outside department of any discrepancies.

6.As a control for cash receipts, which assertion is addressed when the computer starts with the population of daily cash receipts recorded in the daily remittance report and compares customer account numbers on the daily remittance report?

A:Completeness

B:Cutoff

C:Occurrence

D:Classification

7.Which of the following usually has the responsibility of authorizing sales adjustment transactions?

A:The company's bank

B:Management

C:Accounts payable

D:The business unit that makes the sale

8.Which of the following are ways an auditor can revise the planned substantive tests after determining internal controls cannot be relied upon? Select all that apply.

A:Consider increasing sample sizes when sampling is involved

B:Consider decreasing sample sizes when sampling is involved

C:Change the timing of planned substantive tests related to an assertion from year-end testing to testing interim balances

D:Change the timing of planned substantive tests related to an assertion from interim testing to testing year-end balances

9.Which of the following is the auditor trying to develop expectations for while performing substantive analytical procedures over the sales cycle? Select all that apply.

A:the gross margin

B:the relationship of accounts receivable to sales

C:the relationship of sales commissions to sales wages

D:the accounts payable balance

10.In the revenue process for a company that sells goods and services on account, it is important for the auditor to be knowledgeable about all of the following EXCEPT

A:the entity itself.

B:specific revenue recognition issues that may be relevant to the entity.

C:executive pay structure.

D:how the entity earns revenues.