Auditing Exam #3 Multiple Choice
UPDATED ACTUAL Exam Questions and
CORRECT Answers
For cash receipts, the occurrence transaction-related audit objective affects which of the
following balance-related audit objectives?
a. completeness
b. rights
c. detail tie-in
d. existence - CORRECT ANSWER - a. completeness
Tracing shipping documents to sales invoices provides evidence that
a. sales billed to customers were actually shipped.
b. sales ordered by customers were shipped.
c. shipments to customers were recorded as sales.
d. shipments to customers were properly invoiced. - CORRECT ANSWER - d. shipments
to customers were properly invoiced
What event initiates a transaction in the sales and collection cycle?
a. delivery of the product to a customer
b. customer request for goods or services
c. identification of a new customer
d. receipt of cash - CORRECT ANSWER - b. customer request for goods or services
The return of a positive confirmation of accounts receivable without an exception attests to the
,a. accuracy of the allowance for uncollectible accounts.
b. collectibility of the receivable balance.
c. accuracy of the aging of accounts receivable.
d. accuracy of the receivable balance. - CORRECT ANSWER - d. accuracy of the
receivable balance
An auditor who is auditing accounts receivable would least likely perform which of the
following tests?
a. Obtain an aged trial balance of accounts receivable and trace the total to the general ledger
control account.
b. Confirm a sample of accounts receivables with the customers that owe the balances.
c. Vouch cash receipts to the accounts receivables transactions.
d. Select cash disbursements made shortly after year-end and examine the supporting
documentation such as receiving reports and vendor invoices. - CORRECT ANSWER - d.
Select cash disbursements made shortly after year-end and examine the supporting
documentation such as receiving reports and vendor invoices.
One type of shipping document is the ____________, which is a written contract between the
carrier and the seller of the receipt and shipment of goods.
a. purchase order
b. sales invoice
c. sales order
d. bill of lading - CORRECT ANSWER - d. bill of lading
For sales, the occurrence transaction-related audit objective affects which of the following
balance-related audit objectives?
a. detail tie-in
, b. rights
c. completeness
d. existence - CORRECT ANSWER - d. existence
Which of the following procedures will an auditor most likely perform for year-end accounts
receivable confirmations when the auditor did not receive replies to second requests?
a. Review the cash receipts journal for the month prior to year end.
b. Inspect the shipping records documenting the merchandise sold to the debtors.
c. Increase the assessed level of detection risk for the existence assertion.
d. Intensify the study of internal control concerning the revenue cycle. - CORRECT
ANSWER - b. Inspect the shipping records documenting the merchandise sold to the
debtors.
To test fro recorded sales for which there were no actual shipments, the auditor vouches from the
a. bill of lading to the supporting customer order and sales order.
b. bill of lading to the sales journal.
c. sales journal to the shipping documents.
d. sales journal to the accounts receivable subsidiary ledger. - CORRECT ANSWER - c.
sales journal to the shipping documents
Which of the following is least likely to be a reasonable explanation for an increase in accounts
receivable turnover?
a. Tightening of credit policy
b. Early payment incentives for customers
c. A new grace period for customer payments
d. Implementation of more aggressive collection policies - CORRECT ANSWER - c. A
new grace period for customer payments
UPDATED ACTUAL Exam Questions and
CORRECT Answers
For cash receipts, the occurrence transaction-related audit objective affects which of the
following balance-related audit objectives?
a. completeness
b. rights
c. detail tie-in
d. existence - CORRECT ANSWER - a. completeness
Tracing shipping documents to sales invoices provides evidence that
a. sales billed to customers were actually shipped.
b. sales ordered by customers were shipped.
c. shipments to customers were recorded as sales.
d. shipments to customers were properly invoiced. - CORRECT ANSWER - d. shipments
to customers were properly invoiced
What event initiates a transaction in the sales and collection cycle?
a. delivery of the product to a customer
b. customer request for goods or services
c. identification of a new customer
d. receipt of cash - CORRECT ANSWER - b. customer request for goods or services
The return of a positive confirmation of accounts receivable without an exception attests to the
,a. accuracy of the allowance for uncollectible accounts.
b. collectibility of the receivable balance.
c. accuracy of the aging of accounts receivable.
d. accuracy of the receivable balance. - CORRECT ANSWER - d. accuracy of the
receivable balance
An auditor who is auditing accounts receivable would least likely perform which of the
following tests?
a. Obtain an aged trial balance of accounts receivable and trace the total to the general ledger
control account.
b. Confirm a sample of accounts receivables with the customers that owe the balances.
c. Vouch cash receipts to the accounts receivables transactions.
d. Select cash disbursements made shortly after year-end and examine the supporting
documentation such as receiving reports and vendor invoices. - CORRECT ANSWER - d.
Select cash disbursements made shortly after year-end and examine the supporting
documentation such as receiving reports and vendor invoices.
One type of shipping document is the ____________, which is a written contract between the
carrier and the seller of the receipt and shipment of goods.
a. purchase order
b. sales invoice
c. sales order
d. bill of lading - CORRECT ANSWER - d. bill of lading
For sales, the occurrence transaction-related audit objective affects which of the following
balance-related audit objectives?
a. detail tie-in
, b. rights
c. completeness
d. existence - CORRECT ANSWER - d. existence
Which of the following procedures will an auditor most likely perform for year-end accounts
receivable confirmations when the auditor did not receive replies to second requests?
a. Review the cash receipts journal for the month prior to year end.
b. Inspect the shipping records documenting the merchandise sold to the debtors.
c. Increase the assessed level of detection risk for the existence assertion.
d. Intensify the study of internal control concerning the revenue cycle. - CORRECT
ANSWER - b. Inspect the shipping records documenting the merchandise sold to the
debtors.
To test fro recorded sales for which there were no actual shipments, the auditor vouches from the
a. bill of lading to the supporting customer order and sales order.
b. bill of lading to the sales journal.
c. sales journal to the shipping documents.
d. sales journal to the accounts receivable subsidiary ledger. - CORRECT ANSWER - c.
sales journal to the shipping documents
Which of the following is least likely to be a reasonable explanation for an increase in accounts
receivable turnover?
a. Tightening of credit policy
b. Early payment incentives for customers
c. A new grace period for customer payments
d. Implementation of more aggressive collection policies - CORRECT ANSWER - c. A
new grace period for customer payments
