Principles Of Auditing & Other Assurance Services
21st Edition
ISBN: 9781259916984
Author: WHITTINGTON, Ray, Pany, Kurt
Publisher: Mcgraw-hill Education,
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Question
Chapter 11, Problem 21RQ
To determine
Explain how the creditors can ascertain that the customer has actually returned merchandise while examining credit memoranda.
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Which of the following tests of details most likely would help an auditor determine whether accounts payable have been misstated?a. Examining reported purchase returns that appear too low.
b. Examining vendor statements for amounts not reported as purchases.
c. Searching for customer-returned goods that were not reported as returns.
d. Reviewing bank transfers recorded as cash received from customers.
An audit team would most likely examine the detail support for charges to which of the following accounts?a. Payroll expense.b. Cost of goods sold.c. Supplies expense.d. Legal expense.
What is the process of confirming accounts receivable balances. Why is it important for auditors to understand revenue recognition rules?
Chapter 11 Solutions
Principles Of Auditing & Other Assurance Services
Ch. 11 - Explain the difference between a customers order...Ch. 11 - Prob. 2RQCh. 11 - Prob. 3RQCh. 11 - State briefly the objective of the billing...Ch. 11 - Prob. 5RQCh. 11 - Prob. 6RQCh. 11 - Prob. 7RQCh. 11 - Prob. 8RQCh. 11 - Prob. 9RQCh. 11 - Prob. 10RQ
Ch. 11 - Prob. 11RQCh. 11 - Prob. 12RQCh. 11 - Prob. 13RQCh. 11 - Prob. 14RQCh. 11 - Prob. 15RQCh. 11 - Prob. 16RQCh. 11 - Prob. 17RQCh. 11 - Prob. 18RQCh. 11 - Prob. 19RQCh. 11 - Prob. 20RQCh. 11 - Prob. 21RQCh. 11 - Prob. 22RQCh. 11 - Give an example of a type of receivable...Ch. 11 - Prob. 24RQCh. 11 - Prob. 25QRACh. 11 - Prob. 26QRACh. 11 - Prob. 27QRACh. 11 - Prob. 28QRACh. 11 - Prob. 29QRACh. 11 - Prob. 30QRACh. 11 - Prob. 31QRACh. 11 - Prob. 32QRACh. 11 - Prob. 33QRACh. 11 - Prob. 34QRACh. 11 - Prob. 35QRACh. 11 - Prob. 36AOQCh. 11 - Which of the following would provide the most...Ch. 11 - Prob. 36COQCh. 11 - Prob. 36DOQCh. 11 - Prob. 36EOQCh. 11 - Under SEC rules, which of the following is not...Ch. 11 - Prob. 36GOQCh. 11 - Prob. 36HOQCh. 11 - Prob. 36IOQCh. 11 - Prob. 36JOQCh. 11 - Prob. 36KOQCh. 11 - Prob. 36LOQCh. 11 - Prob. 37OQCh. 11 - Prob. 38OQCh. 11 - An auditors working papers include the following...Ch. 11 - Prob. 40OQCh. 11 - Prob. 41OQCh. 11 - Prob. 42OQCh. 11 - Prob. 43OQCh. 11 - Prob. 44PCh. 11 - Prob. 45PCh. 11 - Prob. 46PCh. 11 - Prob. 47PCh. 11 - The July 31, 20X0, general ledger trial balance of...Ch. 11 - Prob. 49ITCCh. 11 - Prob. 50ECCh. 11 - Prob. 51EC
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Similar questions
- you are auditing accounts receivable balances to confirm sales and found significant discrepancies between the recorded account balances and returned confirmations from customers. Recommend an alternative approach to confirming sales revenue. Provide a rationale for your recommendation.arrow_forward1. Which of the following may be considered to be primary objective of the auditor in the examination of accounts receivables? a. Determine the approximate time of collectability of receivables b. Determine the relationship of receivables to sales c. Determine the reasonableness of the sales figure d. Establish validity and collectability of receivables 2. In determining the validity of accounts receivable, which of the following would the auditor consider most reliable? a. Direct telephone communication between the auditor and debtor b. Confirmation replies received directly from customers c. Credits to accounts receivable from the cash receipts book after the close of business at year end d. Documentary evidence that supports the accounts receivable balance 3. An auditor should perform alternative procedures to substantiate the existence of accounts receivable when a. Pledging of the receivables is probable b. No reply to a negative confirmation request is received c. No reply to a…arrow_forwardImagine that you were auditing accounts receivable balances to confirm sales and found significant discrepancies between the recorded account balances and returned confirmations from customers. Recommend an alternative approach to confirming sales revenue. Provide a rationale for your recommendation.arrow_forward
- Which audit procedure is most effective in testing credit sales for overstatement?(1) Trace a sample of postings from the sales journal to the sales account in thegeneral ledger.(2) Vouch a sample of recorded sales from the sales journal to shipping documents.(3) Prepare an aging of accounts receivable.(4) Trace a sample of initial sales orders to sales recorded in the sales journal.arrow_forwardIn accounting for uncollectible receivables, the balance in Allowance for Doubtful Accounts will directly impact the amount of the adjustment when applying which method? a.) percentage of sales method b.) direct write-off method c.) analysis of receivables method d.) both percentage of sales and analysis of receivables methodsarrow_forwardAn auditor tested the client's internal controls over granting customers credit and establishing customers' credit limits. This test is relevant to the assertion of Valuation for accounts receivable. Question 47 options: True Falsearrow_forward
- discuss the process of auditing the following:• Revenue• Receivables• Expected Credit Loss (ECL)arrow_forwardWhich of the following concepts relates to using the allowance method in accounting for accounts receivable? Bad debt expense is management's determination of which accounts will be sent to the attorney for collection. а. O b. Bad debt expense is an estimate that is based on historical and prospective information. Ос. Bad debt expense is an estimate that is based only on an analysis of the receivables ageing. O d. Bad debt expense is based on the actual amounts determined to be uncollectible.arrow_forwardMULTIPLE CHOICE: 1. Which of the following may be considered to be a primary objective of the auditor in the examination of accounts receivable? A. Establish validity and collectability of receivables B. Determine the approximate time of collectability of receivables C. Determine the relationship of receivables to sales D. Determine the reasonableness of the sales amount 2. Which of the following is not a procedure used by an auditor in the examination of accounts receivable? A. Confirmation B. Reconciliation C. Inquiry D. Physical count and inspection 3. In determining validity of accounts receivable, which of the following would the auditor consider most reliable ? A. Direct telephone communication between the auditor and debtor B. Confirmation replies received directly from customers C. Credits to accounts receivable from the cash receipts book after the close of business at year end D. Documentary evidence that supports the accounts receivable balance 4. Which of the following…arrow_forward
- Which of the following frames would best enable an auditor to test a sales/receivables system to determine that receivables are supported by all required documentation ? (a) Customer list (b) Sales invoice log Sales order log (d) Shipping logarrow_forwardAudit documentation often includes a client-prepared, aged trial balance of accounts receivable as of the balance sheet date. The audit team uses this aging primarily toa. Evaluate internal control over credit sales.b. Test the accuracy of recorded charge sales.c. Estimate credit losses.d. Verify the existence of the recorded receivables.arrow_forwardTo gather audit evidence about the proper credit approval of sales (i.e., valuation assertion), the auditor would select a sample of documents from the population represented by the a. Subsidiary customers' accounts ledger. b. Sales invoice file. c. Bill of lading file. d. Customer order file.arrow_forward
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