ACCT 410 Gleim Quiz 5 Questions and Answers Fully Solved
A CPA auditing an electric utility wishes to determine whether all customers are being billed. The CPA's
best direction of test is from the - Answers Meter department records to the billing (sales) register.
An auditor reconciles the total of the accounts receivable subsidiary ledger to the general ledger control
account, as of October 31. By this procedure, the auditor would be most likely to learn of which of the
following? - Answers An opening balance in a subsidiary ledger account was improperly carried forward
from the previous accounting period.
An inappropriate audit procedure relative to customers' accounts receivable is to determine that the -
Answers Accounts are collected by the balance sheet date.
An audit client sells 15 to 20 units of product annually. A large portion of the annual sales occur in the
last month of the fiscal year. Annual sales have not materially changed over the past 5 years. Which of
the following approaches would be most effective concerning the timing of audit procedures for
revenue? - Answers The auditor should inspect transactions occurring in the last month of the fiscal year
and review the related sale contracts to determine that revenue was posted in the proper period.
Material misstatements due to fraudulent financial reporting often result from an overstatement of
revenues (for example, through premature revenue recognition or recording of fictitious revenues) or an
understatement of revenues (for example, through improperly shifting revenues to a later period). To
address the risk of improper revenue recognition, the auditor most likely should - Answers Assume the
existence of risks of material misstatement due to fraud relating to revenue recognition.
Which of the following audit procedures would be most appropriate to test the valuation of the
collateral of a delinquent loan receivable? - Answers Obtaining a current value appraisal of the
collateral.
To conceal defalcations involving receivables, the auditor would expect an experienced bookkeeper to
charge which of the following accounts? - Answers Sales returns.
An auditor most likely would review an entity's periodic accounting for the numerical sequence of
shipping documents and invoices to support management's financial statement assertion of - Answers
Completeness.
For effective internal control, employees maintaining the accounts receivable subsidiary ledger should
not also approve - Answers Write-offs of customer accounts..
An auditor noted that the accounts receivable department is separate from other accounting activities.
Credit is approved by a separate credit department. Control accounts and subsidiary ledgers are
balanced monthly. Similarly, accounts are aged monthly. The accounts receivable manager writes-off
delinquent accounts after 1 year, or sooner if a bankruptcy or other unusual circumstances are involved.
Credit memoranda are pre-numbered and must correlate with receiving reports. Which of the following
A CPA auditing an electric utility wishes to determine whether all customers are being billed. The CPA's
best direction of test is from the - Answers Meter department records to the billing (sales) register.
An auditor reconciles the total of the accounts receivable subsidiary ledger to the general ledger control
account, as of October 31. By this procedure, the auditor would be most likely to learn of which of the
following? - Answers An opening balance in a subsidiary ledger account was improperly carried forward
from the previous accounting period.
An inappropriate audit procedure relative to customers' accounts receivable is to determine that the -
Answers Accounts are collected by the balance sheet date.
An audit client sells 15 to 20 units of product annually. A large portion of the annual sales occur in the
last month of the fiscal year. Annual sales have not materially changed over the past 5 years. Which of
the following approaches would be most effective concerning the timing of audit procedures for
revenue? - Answers The auditor should inspect transactions occurring in the last month of the fiscal year
and review the related sale contracts to determine that revenue was posted in the proper period.
Material misstatements due to fraudulent financial reporting often result from an overstatement of
revenues (for example, through premature revenue recognition or recording of fictitious revenues) or an
understatement of revenues (for example, through improperly shifting revenues to a later period). To
address the risk of improper revenue recognition, the auditor most likely should - Answers Assume the
existence of risks of material misstatement due to fraud relating to revenue recognition.
Which of the following audit procedures would be most appropriate to test the valuation of the
collateral of a delinquent loan receivable? - Answers Obtaining a current value appraisal of the
collateral.
To conceal defalcations involving receivables, the auditor would expect an experienced bookkeeper to
charge which of the following accounts? - Answers Sales returns.
An auditor most likely would review an entity's periodic accounting for the numerical sequence of
shipping documents and invoices to support management's financial statement assertion of - Answers
Completeness.
For effective internal control, employees maintaining the accounts receivable subsidiary ledger should
not also approve - Answers Write-offs of customer accounts..
An auditor noted that the accounts receivable department is separate from other accounting activities.
Credit is approved by a separate credit department. Control accounts and subsidiary ledgers are
balanced monthly. Similarly, accounts are aged monthly. The accounts receivable manager writes-off
delinquent accounts after 1 year, or sooner if a bankruptcy or other unusual circumstances are involved.
Credit memoranda are pre-numbered and must correlate with receiving reports. Which of the following
