3. Which assertion related to accounts receivable and sales is most directly addressed by the control that uses prenumbered shipping and billing documents and accounting for the sequence?

MULTIPLE CHOICE

a. Existence or occurrence.

b. Completeness

c. Rights and obligations.

d. Presentation and disclosure.

4. To test the existence assertion for accounts receivables, the auditors would:

MULTIPLE CHOICE

a. obtain an aged trial balance.

b. Examine customer purchase orders.

c. Confirm accounts receivable.

d. Review the clerical adequacy of sales invoices.

7. Which of the following is not a reason why does the audit of accounts receivable and sales presents a significant audit risk?

MULTIPLE CHOICE

a. Significant accounting estimates are used to determine amounts in these areas.

b. Overstatements in this area has been the cause of many financial fraud incidents.

c. Many of the clients customers tend to be disreputable.

d. Overstatements in this area causes net income to be overstated.

9. In reference to the confirmation of accounts receivable which of the following is false?

MULTIPLE CHOICE

a. The client company should request the confirmation.

b. Confirmation replies should be sent directly to the auditor.

c. Confirmation requests should be deposited personally at the post office by the auditors.

d. Client customer post office box addresses increase the validity of the confirmation.

19. What is the purpose of the auditors in making and recording test counts of inventory quantities during their observation of the taking of the physical inventory?

MULTIPLE CHOICE

a. Test counts will be compared to quantities in the completed inventory listing.

b. Test counts will be used to test the amount of items sold.

c. Test counts will be used to determine obsolete inventory.

d. Test counts will be used to test the amount of inventory on consignment.