Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN: 9781337619455
Author: Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher: Cengage Learning
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Chapter 5, Problem 37CYBK
To determine
Introduction: Audit evidence is the proof that an auditor tries to seek from an organization in order to claim that the assertions related to financial transactions are correct.
whether the statement is true or false.
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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 log
An 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
False
Explain the importance of proper credit approval for sales. Whateffect do adequate controls in the credit function have on the auditor’s evidence accumulation?
Chapter 5 Solutions
Auditing: A Risk Based-Approach (MindTap Course List)
Ch. 5 - Prob. 1CYBKCh. 5 - Prob. 2CYBKCh. 5 - Prob. 3CYBKCh. 5 - Prob. 4CYBKCh. 5 - Prob. 5CYBKCh. 5 - Prob. 6CYBKCh. 5 - Prob. 7CYBKCh. 5 - Prob. 8CYBKCh. 5 - Prob. 9CYBKCh. 5 - Prob. 10CYBK
Ch. 5 - Prob. 11CYBKCh. 5 - Prob. 12CYBKCh. 5 - Prob. 13CYBKCh. 5 - Prob. 14CYBKCh. 5 - Prob. 15CYBKCh. 5 - Which of the following accounts would not be...Ch. 5 - Prob. 17CYBKCh. 5 - Prob. 18CYBKCh. 5 - Prob. 19CYBKCh. 5 - Which management assertion is usually most...Ch. 5 - Prob. 21CYBKCh. 5 - Prob. 22CYBKCh. 5 - Prob. 23CYBKCh. 5 - Prob. 24CYBKCh. 5 - Prob. 25CYBKCh. 5 - Prob. 26CYBKCh. 5 - Prob. 27CYBKCh. 5 - Prob. 28CYBKCh. 5 - Prob. 29CYBKCh. 5 - Prob. 30CYBKCh. 5 - Prob. 31CYBKCh. 5 - Prob. 32CYBKCh. 5 - Prob. 33CYBKCh. 5 - Prob. 34CYBKCh. 5 - Prob. 35CYBKCh. 5 - Prob. 36CYBKCh. 5 - Prob. 37CYBKCh. 5 - Prob. 38CYBKCh. 5 - Prob. 39CYBKCh. 5 - Prob. 40CYBKCh. 5 - Prob. 41CYBKCh. 5 - Prob. 42CYBKCh. 5 - Prob. 43CYBKCh. 5 - Prob. 44CYBKCh. 5 - Prob. 45CYBKCh. 5 - Prob. 46CYBKCh. 5 - Prob. 47CYBKCh. 5 - Prob. 48CYBKCh. 5 - Prob. 1RQSCCh. 5 - Prob. 2RQSCCh. 5 - Prob. 3RQSCCh. 5 - Prob. 4RQSCCh. 5 - Prob. 5RQSCCh. 5 - Prob. 6RQSCCh. 5 - Professional guidance indicates that the auditor...Ch. 5 - Identify the accounts associated with the...Ch. 5 - Assume that an organization asserts that it has...Ch. 5 - Prob. 10RQSCCh. 5 - Prob. 11RQSCCh. 5 - Prob. 12RQSCCh. 5 - Prob. 13RQSCCh. 5 - List factors that might affect an audit firm’s...Ch. 5 - Prob. 15RQSCCh. 5 - Prob. 16RQSCCh. 5 - Prob. 17RQSCCh. 5 - Prob. 18RQSCCh. 5 - Prob. 19RQSCCh. 5 - Prob. 20RQSCCh. 5 - Prob. 21RQSCCh. 5 - Prob. 22RQSCCh. 5 - Prob. 23RQSCCh. 5 - Prob. 24RQSCCh. 5 - Prob. 25RQSCCh. 5 - Prob. 26RQSCCh. 5 - Prob. 27RQSCCh. 5 - Prob. 28RQSCCh. 5 - Prob. 29RQSCCh. 5 - Prob. 30RQSCCh. 5 - Prob. 32RQSCCh. 5 - Prob. 33RQSCCh. 5 - Prob. 34RQSCCh. 5 - Prob. 35RQSCCh. 5 - Prob. 36RQSCCh. 5 - Prob. 37RQSCCh. 5 - Prob. 38RQSCCh. 5 - Prob. 39RQSCCh. 5 - Prob. 40RQSCCh. 5 - Prob. 42RQSCCh. 5 - Prob. 43RQSCCh. 5 - Prob. 44FF
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- You are developing the policies and procedures in relation to credit sales. What processes would you include in relation to preparing invoices, preparing journal entries for these invoices, authorising these journal entries and filing invoices for auditing purposesarrow_forwardWhat are the goals of dual-direction testing regarding an audit of the accounts receivable andcash collection system?arrow_forwardWhen will a credit check approval most likely require specific authorization by the credit department? a. when verifying that the current transaction does not exceed the customer’s credit limit b. when verifying that the current transaction is with a valid customer c. when a valid customer places a materially large order d. when a valid customer returns goodsarrow_forward
- In a test of controls, auditors may trace receiving reports to vouchers recorded in the voucher register. This is a test fora. Occurrence.b. Completeness.c. Classification.d. Cutoff.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_forwardThe control procedure “credit sales approved by credit department” is directed toward which assertion?a. Existence/Occurrence.b. Completeness.c. Valuation/Accuracy.d. Cutoff.arrow_forward
- Audit 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_forwardWhich of the following tests of controls is most useful in assessing the transaction-related audit objective related to completeness? Attempt to input transactions with valid and invalid vendors. Account for sequence of vouchers and ensure that the vouchers prenumbered. Examine supporting documents for indication of approval. Examine documents in voucher package for occurrence.arrow_forwardWhich assertion is most likely being tested when an auditor vouches transactions from the sales Journal to the sales orders? a. cutoff b. rights c. completeness d. accuracyarrow_forward
- "In order to determine whether internal control operated effectively to minimize errors of failure to invoice a shipment, the auditor would select from a sample of transactions from the population represented by the" Customer order file. Bill of lading file. Subsidiary-ledger Sales invoice filearrow_forwardWe discussed the difference between a) tracing a sample of transactions from the source documents to the ledgers and b) vouching a transaction from the ledger to the source documents. 1. Which assertion would we be testing in each case? 2. Which approach would we use for Accounts Receivable and which would we use for Accounts Payable? And, why?arrow_forwardChoose the one correct answer. Which of the following Test of Controls is done to examine whether purchase orders, receiving reports and vouchers are prenumbered and accounted for? *Select samples from creditors list and send creditors’ confirmation. Examine evidence of approval of unusual trade terms and discounts. Trace samples of goods received notes to the related suppliers’ invoices and entries in the purchase journal and in creditors’ ledger. Review bank statements for any unrecorded cheques payments.arrow_forward
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