7.1 If the auditor is performing an audit of only the financial statements, and is planning on relying on the client's controls, the auditor would test the operating effectiveness of internal controls throughout the year. Under certain circumstances the auditor is required to test the operating effectiveness of internal controls.

Select the circumstance that clearly would require the auditor to test the operating effectiveness of internal controls.

a. Any time the auditor concludes that a modified opinion will be issued on the financial statements.

b. Any time the auditor is engaged to perform an audit of the entity.

c. Any time the auditor concludes that a disclaimer of will be issued on the financial statements.

	d. If the is engaged to perform an integrated audit.

7.2 Select the primary activity that does not normally affect the revenue cycle.

a Sales returns and allowances

b Purchase Returns and Allowances

c Warranty claimss

d Order taking, shipment, and billing of goods

7.3 Select the account that is not typically associated with the revenue cycle.

a Sales

b Sales Returns and Allowances

c Accounts Receivable

d Allowance for Uncollectible Accounts

e Bad Debt Expense

f Warranty Liabilities and Expense

g Purchase Returns and Allowances

h Sales Commission Expense