QUESTION 12

1. Which of the following statements are key approvals required to address risks within the sales cycle.

   	a.	The product is shipped only when the production manager authorizes.
   	b.	The credit department approves credit on account before sales transaction is finalized.
   	c.	Purchase price and other terms are authorized by sales manager.
   	d.	All of the above.

2 points

QUESTION 13

1. An auditor is performing a procedure to trace remittance advices to the cash receipts journal. This audit procedure is for the audit objective to ________

   	a.	Determine whether all cash receipts were recorded.
   	b.	Determine effectiveness of approval controls in cash receipting process.
   	c.	Determine whether material variances exist between the sales general ledger and subsidiary ledgers.
   	d.	Determine whether cash amounts balance out.

2 points

QUESTION 14

1. True or False Proof of cash receipts is an audit procedure to verify whether all recorded cash receipts have been deposited and to detect cash receipts that were not recorded yet.

   	a.	True
   	b.	False

2 points

QUESTION 15

1. An auditor wants to verify accounts receivable charged off as uncollectible. All are acceptable audit procedures to achieve the audit objective, except for?

   	a.	Check for authorization of accounts that were charged off.
   	b.	Inspect emails or documentation that shows uncollectiblity of accounts.
   	c.	Review the rationale for the write-off and compare it to company policy for charging off uncollectible accounts.
   	d.	Re-perform credit scoring for a sample of customers for accuracy.

2 points

QUESTION 16

1. Which of the following would offer the best control for an organization to prevent a reoccurrence of a previously detected "lapping" problem with trade accounts receivable?

   	a.	Segregate duties so that no employee has access to both checks from customers and currency from daily cash receipts.
   	b.	Request that customer's payment checks be made payable to the company and addressed to the treasurer.
   	c.	Have customers send payments directly to the company's depository bank.
   	d.	Segregate duties so that the bookkeeper in charge of the general ledger has no access to incoming mail.

2 points

QUESTION 17

1. To test for recorded sales for which there were no actual shipments, the auditor vouches from the:

   	a.	bill of lading to the sales journal.
   	b.	sales journal to the accounts receivable subsidiary ledger.
   	c.	sales journal to the shipping documents.
   	d.	bill of lading to the supporting customer order and sales order.

2 points

QUESTION 18

1. The auditor is testing the controls over recording sales returns and allowances. The auditor finds that due to inadequate documentation and approvals, the control is deemed ineffective. What is the consequence of this finding ?

   	a.	sampling is not appropriate.
   	b.	all sales returns must be confirmed with the customer.
   	c.	all sales returns must be traced to supporting documentation.
   	d.	a larger sample may be required to verify cutoff.