Ch 11 hw/quiz

The most practical and effective audit procedure for detecting lapping is:

Comparing recorded cash receipts in detail against items making up the bank deposit as shown on duplicate deposit slips validated by the bank.

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

Completeness

Which of the following procedures is least likely to help auditors to assess the adequacy of management's accounting estimate of the allowance for doubtful accounts?

Review amounts of accounts which have been written off as uncollectible prior to year-end.

Using the allowance method, the uncollectible accounts for the year is estimated to be $35,000. If the balance for the Allowance for Doubtful Accounts is a $9,000 debit before adjustment, what is the amount of bad debt expense for the period?

$44,000

Smithson Corporation's unadjusted trial balance includes the following balances (assume normal balances): - Accounts Receivable $2,238,000 - Allowance for Doubtful Accounts $42,600 (credit balance) Bad debts are estimated to be 6% of outstanding receivables. What amount of bad debts expense will the company record?

2,238,000* .06=134,280-42,600 = $91,680

Which of the following is statements is correct about "window dressing?"

A number of window dressing practices represent proper and appropriate business practices.

Which of the following would provide the most assurance concerning the valuation of accounts receivable?

Assess the allowance for uncollectible accounts for reasonableness.

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

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

Which of the following is a proper alternative audit procedure for nonresponses to positive accounts receivable confirmation requests?

Examination of subsequent cash receipts in payment of the receivable.

Which of the following would most likely be detected by an auditor's review of the client's sales cutoff?

Inflated sales for the year.

When scheduling audit work, the auditors are most likely to confirm accounts receivable balances at an interim date if:

Internal control is strong

The best control to prevent lapping is:

Separation of recordkeeping for receivables from custody of cash.

Tracing copies of shipping documents to sales invoices will provide evidence that all:

Shipments to customers were billed.

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

Shipping documents file.

Which of the following is one of the most conclusive forms of evidence in establishing the existence of accounts receivable?

The confirmation of accounts

Which of the following would be least likely to diminish the validity of evidence obtained from confirmation of accounts receivable?

The confirmation requests are sent on the client's letterhead.

Which of the following is the best argument against the use of negative accounts receivable confirmations?

The inference drawn from receiving no reply may not be correct.

An analysis of the aged accounts receivables is most directly related to which substantive test objective?

Valuation

An aging of a company's accounts receivable indicates that $4,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,600 debit balance, the adjustment to record bad debts for the period will require a:

debit to Bad Debt Expense for $5,600

An aging of a company's accounts receivable indicates that $4,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $1,200 credit balance, the adjustment to record bad debts for the period will require a:

debit to Bad Debts Expense for $2,800