Question 41

3pts

If testing the operating effectiveness of controls surrounding an estimate alone does not provide sufficient appropriate audit evidence, _______.

Group of answer choices

the auditors should disregard testing of controls completely, and instead focus on substantive testing

auditors also conduct substantive procedures on the reasonableness of accounting estimates

the auditors should consider increasing the risk and cost associated with the audit

auditors also conduct tests of internal controls pertaining to the reasonableness of accounting estimates

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Question 42

3pts

The difference between what is reported in the client prepared financial statements and what is required for the item to be presented fairly in accordance with the applicable financial reporting framework is called _______.

Group of answer choices

misstatement

auditing misappropriation

projected estimate

accumulated inaccuracy

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Question 43

3pts

In the revenue cycle, which of the following assertions does not apply to the relevant account balances in the revenue cycle?

Group of answer choices

Completeness

Existence

Valuation

Classification

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Question 44

3pts

With respect to performing analytical procedures to understand total revenue, the auditor should understand _______.

Group of answer choices

revenue recognition methods of all firms within the industry

how the client firm handles depreciation entries related to contra-revenue accounts

the entity's capacity, the maximum volume of sales that it could generate if it fully utilized its facilities and employees to manufacture and deliver products and services

how the firm relates its cost of goods sold to revenue recognition

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Question 45

3pts

If a reasonable estimate of potential refunds cannot be made, _______.

Group of answer choices

revenue should not be recognized until the material uncertainty is resolved

no revenue recognition should occur during the life of the refund obligation

a portion of the revenue should recognized immediately upon sale

the firm should simply disregard any expense and handle on a case-by-case basis

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Question 46

3pts

Recognizing revenues without shipping would lead to ________ gross margins and _______ accounts receivable turnover in days.

Group of answer choices

decreased; high

decreased; low

increased; high

increased; low

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Question 47

3pts

As an important control for the occurrence assertion related to sales, the computer starts with the population of daily sales invoices and develops a one for one match with underlying shipping documents to ensure that each sales invoice is supported by a ________.

Group of answer choices

bill of lading

sales order

sales invoice

packing slip

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Question 48

3pts

Which of the following is a control for the completeness (of cash receipts assertion)?

Group of answer choices

The computer compares each item on the underlying information in the bank remittance report to develop a one for one match with recorded cash receipts in the daily remittance report.

The computer starts with the population of daily cash receipts recorded in the daily remittance report and develops a one for one match with the underlying bank remittance report.

The computer starts with the population of daily cash receipts recorded in the daily remittance report and it compares the dollar amount of each recorded cash receipt with the underlying bank remittance report.

The computer starts with the population of daily cash receipts recorded in the daily remittance report and compares the date recorded in the daily remittance report with the date received and deposited by the bank.

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Question 49

3pts

Good internal controls over the write-off of uncollectible accounts ________.

Group of answer choices

are important to prevent write-offs from being used to conceal fraud in processing cash receipts

are typically expensive and cumbersome to implement

are less important if accounts receivable are outsourced

are optional if the company is smaller in size

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Question 50

3pts

Which assertion doauditors test when they trace a sample of sales, cash receipts, and sales adjustment transactions to their recording in the accounting records?

Group of answer choices

Classification

Cutoff

Accuracy

Completeness