Chapter 11 MC

Which of the following would provide the most assurance concerning the valuation of AR?

Assess the allowance for uncollectible accounts for reasonableness

Which of the following is an example of misappropriation of assets relating to sales?

Theft of cash register sales

Which of the following is most likely to be an example of fraudulent financial reporting relating to sales?

Recording sales when the customer is likely to return the goods.

To test the existence assertion for recorded receivables, the auditors would select a sample from the:

Accounts receivable subsidiary ledger

Which of the following would most likely be detected by an auditors review of the clients sales cutoff?

Inflated sales for the year

Which of the following is least likely to be considered an inherent risk relating to receivables and revenues?

Over recorded sales due to a lack of control over the sales entry function

Identify the control that is most likely to prevent the concealment of a cash shortage relisting from the improper write off of a trade account receivable:

Write offs must be approved by a responsible official after review of a credit department recommendations and supportive evidence.

Which assertion relating to sales is most directly addressed when the auditors compare a sample of shipping documents to related sales invoices?

completeness

There is an presumption that auditors will confirm accounts receivable unless the auditors' assessment of the risk of material misstatement is low

And accounts receivable are immaterial, or the use of confirmations would be ineffective

To determine that all sales have been recorded, the auditors would select a sample of transactions from the:

Shipping documents file

Which of the following is not among the criteria that ordinarily exists for revenue to be recognized

Delivery has occurred or is scheduled to occur in the near future