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1、Chapter14 finalCHAPTER 14 Multiple-Choice Questions 1. easy d 2. easy d 3. easy d 4. easy c 5. easy a 6. easy b 7. easy c Which of the following is not an account affected by the sales and collection cycle? a. Cash b. Accounts receivable c. Allowance for doubtful accounts d. Gross margin Which of th
2、e following is not one of the five classes of transactions included in the sales and collection cycle? a. Sales returns and allowances b. Charge-off of uncollectible accounts c. Bad debt expense d. Depreciation expense What event initiates a transaction in the sales and collection cycle? a. Receipt
3、of cash. b. Delivery of product to a customer. c. Identification of a new customer. d. Customer request for goods. A _ is a document that indicates a request for merchandise by a customer. a. sales invoice b. vendor invoice c. customer order d. sales order A _ is a document that communicates the des
4、cription, quantity, and related information for goods ordered by a customer. a. sales order b. customer order c. vendor invoice d. sales invoice What critical event must take place before goods can be shipped? a. Determination of correct delivery address b. Credit approval c. Receipt of cash d. Rece
5、ipt of sales order from the customer Before goods are shipped on account, a properly authorized person must: a. prepare the sales invoice. b. approve the journal entry. c. approve the customers credit. d. verify that the unit price is accurate. 14-1 8. easy b 9. easy a 10. easy d 11. easy c 12. easy
6、 c 13. easy d 14. easy d 15. easy b A document prepared to initiate shipment of the goods sold is the: a. sales order. b. bill of lading. c. sales invoice. d. customer order. The document used to indicate to the customer the amount of a sale and payment due date is the: a. sales invoice. b. bill of
7、lading. c. purchase order. d. sales order. At what point in the sales and collection cycle does the company first give up assets? a. Sales approval b. Credit approval c. Cash collection d. Shipment of goods Most companies recognize sales revenue when: a. sales are invoiced. b. customer orders are re
8、ceived. c. goods are shipped. d. customer orders are approved. Which of the following is not a business function within the “Sales” class of transactions? a. Processing customer orders. b. Granting credit. c. Processing and recording sales returns and allowances. d. Shipping goods. The total of the
9、individual account balances in the accounts receivable master file equals the: a. total sales for the period. b. balance of the sales account in the general ledger. c. total sales less the total cash received for the period. d. balance of the accounts receivable account in the general ledger. A list
10、ing of amounts owed by customer which shows how long each component part has been due is the: a. trial balance. b. working trial balance. c. accounts receivable trial balance. d. aged accounts receivable trial balance. A document sent to each customer showing his or her beginning accounts receivable
11、 balance and the amount and date of each sale, cash payment received, any debit or credit memo issued, and the ending balance is the: a. accounts receivable subsidiary ledger. b. monthly statement. c. remittance advice. d. sales invoice. 14-2 16. easy b 17. easy c 18. easy a 19. easy c 20. easy b 21
12、. easy b 22. easy a 23. easy a The document that accompanies the customers payment is the: a. credit memo. b. remittance advice. c. vendor invoice. d. monthly statement. The document that supports reductions in accounts receivable is the: a. bill of lading. b. sales invoice. c. credit memo. d. month
13、ly statement. A document that initiates shipment of goods and indicates the description of the merchandise, the quantity shipped, and customer name and address is the: a. bill of lading. b. sales invoice. c. picking ticket. d. vendor invoice. When designing audit procedures, the direction of tests i
14、s a crucial step in satisfying the: a. valuation objective. b. cutoff objective. c. completeness objective. d. classification objective. Which of the following documents is not commonly associated with the “cash receipts” class of transactions? a. Remittance advice. b. Sales order. c. Prelisting of
15、cash receipts. d. Cash receipts journal or listing. The process which postpones entries for the collection of receivables to conceal an existing cash shortage is referred to as: a. kiting. b. lapping. c. floating. d. shorting. When sales invoices are automatically calculated and posted by a computer
16、, the auditor may be able to reduce substantive tests of transactions for which, if any, objective? a. Accuracy b. Existence c. Completeness d. None of the above The _ is a contract between a carrier (e.g., a trucking company) and the seller of goods that dictates the details surrounding the shipmen
17、t of goods. a. bill of lading b. sales invoice c. picking ticket d. remittance advice 14-3 24. easy c 25. medium c 26. medium b 27. medium c 28. medium b 29. medium c 30. medium a 31. medium d Some companies have customers send payments directly to an address maintained by a bank. This is called a(n
18、) _ system. a. direct deposit b. funds transfer c. lockbox d. interbank transfer In many audits, no substantive tests of transactions are made for the _ objective on the grounds that understatement of sales is not a concern. a. accuracy b. existence c. completeness d. none of the above The most impo
19、rtant aspects of the billing function include all but which of the following? a. Making sure that all shipments have been billed. b. Making sure that no shipment has been billed more than twice. c. Making sure that each shipment is billed at the correct amount. d. All of the above are correct. For t
20、he most part, the audit of the sales and collection cycle: a. cannot be performed until the audit of cash is completed. b. must be performed first so that the audit of the other cycles can rely on the data. c. can be performed independently of the audit of other cycles. d. must be performed simultan
21、eously with the audit of the purchases and disbursements cycle. An audit procedure that compares the name, amount, and dates shown on remittance advices with cash receipts journal entries and with related duplicate deposit slips would be effective in detecting: a. kiting. b. lapping. c. illicit writ
22、e-offs of customers as uncollectible accounts. d. sales without proper credit authorization. In which of the following will sales return and allowances not be recorded? a. Sales returns and allowances transaction file b. Accounts receivable master file c. Cash receipts journal d. Sales returns and a
23、llowances will be recorded in all of the above For most firms, the function of indicating credit approval is recorded on the: a. sales order. b. sales invoice. c. customer order. d. remittance advice. The document used as the basis for recording sales transactions and updating the accounts receivabl
24、e master file is the: a. sales order. b. bill of lading. c. sales journal. d. sales invoice. 14-4 32. medium c 33. medium d 34. medium d 35. medium c 36. medium b 37. medium a 38. medium a When posting the sales journal, details of the journal are posted to “x” and journal totals are posted to “y.”
25、a. x = the sales account. y = the general ledger. b. x = the sales account. y = the accounts receivable subsidiary ledger. c. x = the accounts receivable master file. y = the general ledger. d. x = the accounts receivable account in the general ledger. y = the sales account in the general ledger. Cr
26、edit memos are normally issued for what purpose(s)? a. To maintain control of returned merchandise. b. To facilitate record keeping. c. To reduce customer frustration and sales losses. d. Both a and b. Proper auditing requires that an account receivable must be charged off by the client when: a. the
27、 customer files for bankruptcy. b. the account is at least six months old. c. a collection agency cannot inspire customer to pay the debt. d. the client company concludes that an amount is no longer collectible. Who is generally responsible for opening receipts when a company uses a lockbox to speed
28、 the handling of cash receipts? a. Company personnel. b. Temporary employees in the town where the lockbox is located. c. Bank employees. d. None of the above. A document used to indicate authority to write an account receivable off as uncollectible is the: a. credit memo. b. uncollectible account a
29、uthorization form. c. debit memo. d. none of the above. After the auditor has identified the key internal controls and deficiencies and assessed control risk for a private company, it is appropriate to decide whether: a. substantive tests will be reduced sufficiently to justify costs of performing t
30、ests of controls. b. substantive tests will be increased sufficiently to justify costs of performing tests of controls. c. tests of controls will be increased sufficiently to justify costs of performing substantive tests. d. tests of controls will be reduced sufficiently to justify costs of performi
31、ng substantive tests. Managements assertions for sales and collection activities are _ when sales are generated via e-commerce activities. a. unchanged b. expanded c. mitigated d. decreased 14-5 39. medium c 40. medium a 41. medium c 42. medium a 43. medium b 44. medium b 45. medium b 46. medium b T
32、o prevent fraud, management should deny cash access to anyone responsible for: a. entering sales transactions. b. entering cash receipts transactions. c. both a and b. d. neither a nor b. One key internal control to prevent fictitious transactions in the sales and collection cycle is: a. to include
33、a list of customer numbers in the computer files. b. to account for the integrity of the numerical sequence of sales orders. c. to include the sales price list of all products in the computer files. d. having bank reconciliations prepared by one who is independent of the treasury function. The credi
34、t-granting function should be separated from which of the following? a. Purchasing function b. Manufacturing function c. Sales function d. None of the above Which one of the following statements is true? In deciding on substantive tests of transactions: a. some procedures are commonly employed on ev
35、ery audit regardless of the circumstances. b. all procedures are dependent on the adequacy of the controls and the results of the tests of controls. c. results obtained in the prior years audit will not affect the procedures used this year. d. the materiality of the item will not influence the choic
36、e of procedures used. To test for recorded sales for which there were no actual shipments, the auditor traces from the: a. bill of lading to the sales journal. b. sales journal to the bill of lading. c. sales journal to the accounts receivable subsidiary ledger. d. bill of lading to the supporting c
37、ustomer order and sales order. An effective procedure to test for unbilled shipments is to trace from the: a. sales journal to the shipping documents. b. shipping documents to the sales journal. c. sales journal to the accounts receivable ledger. d. sales journal to the general ledger sales account.
38、 The auditor traces items from the source documents to the journals to satisfy the: a. existence objective. b. completeness objective. c. ownership objective. d. valuation objective. In many audits of sales transactions, no substantive tests of transactions are performed for the completeness objecti
39、ve because: a. understatements of assets and income are a greater concern than overstatements. b. overstatements of assets and income are a greater concern than understatements. c. it doesnt matter if income is understated because the savings on income tax offsets the reduced revenue and net income
40、is correct. d. the unrecorded sales cause a reduction of accounts receivable; therefore, the ratios of the two financial statements will not be misleading. 14-6 47. medium b 48. medium d 49. medium c 50. medium b 51. medium d 52. medium a 53. medium b 54. medium a To determine that sales are accurat
41、ely recorded, the unit prices on the duplicate sales invoices are normally compared with: a. the original invoices. b. an approved price list. c. the amounts recorded in the sales journal for that transaction. d. the amounts posted to the customers account in the accounts receivable master file. Whi
42、ch of the following is not a point at which the auditor deems authorization to be critical? a. Authorization of credit. b. Price authorization. c. Shipment of goods. d. Each of the above is an important point for authorization. With respect to sales, prenumbered documents are intended to: a. prevent
43、 the failure to bill or record sales. b. prevent duplicate billings or recordings of sales. c. both a and b. d. neither a nor b. Prenumbered documents will only be useful for control purposes if: a. a different numerical sequence is used for each company. b. the sequence is accounted for periodicall
44、y. c. employees do not have access to the complete sequence. d. all of the above are true. It is important that sales be billed and recorded in the journal as soon as possible after: a. the order is received. b. the order is received and credit is approved. c. credit is approved and it is verified t
45、hat there is enough inventory to fill the order. d. the shipment takes place. _ tests for omitted transactions, while _ tests for nonexistent transactions. a. Tracing, vouching b. Vouching, tracing c. Verifying, tracking d. Tracking, verifying The audit procedure referred to as proof of cash receipt
46、s is useful to test: a. time lags in making deposits. b. whether all recorded cash receipts have been deposited in the bank. c. whether there are cash receipts that have not been recorded in the journals. d. all three of the above. Which of the following procedures would ordinarily be best expected
47、to find unrecorded sales? a. Compare shipping documents with sales records. b. Apply gross profit rates to inventory disposed of during the period. c. Trace payments received subsequent to the balance sheet date. d. Send accounts receivable confirmation requests. 14-7 55. medium d 56. medium b 57. challenging a 58. challenging a 59. challenging a 60. challenging d 61. challenging a At which point in an ordinary sales transaction would a lack of specific authorization be of least concern to the auditor? a. Granting of credit. b. Shipment of goods. c. Determination of discou
