DeVry ACCT444 Week 5 Quiz (2016) Score 100%

Question

1. Question :

(TCO 6) Tests of controls may include which of the following types of evidence?

Observation

Reperformance

Inquiries

All of the above

Question 2. Question :

(TCO 6) Which of the following is not a direct result of performing analytical procedures?

Identify areas of potential misstatements.

Reduce detailed audit risk.

Understand the client’s business.

Identify specific errors in the accounts.

Question 3. Question :

(TCO 6) Ending account balances may be audited through the use of which of the following types of audit procedures?

Tests of details of balances

Analytical procedures

Tests of controls

Both A and B are correct

Question 4. Question :

(TCO 6) Which of the following represents an incorrect pairing of a type of audit test and evidence?

Procedures to obtain an understanding of internal controls—documentation

Analytical procedures—ratio analysis

Substantive tests of transactions—confirmation

Tests of details of balances—physical examination

Question 5. Question :

(TCO 6) In the context of an audit of financial statements, substantive tests are audit procedures that

may be eliminated under certain conditions.

are designed to discover significant subsequent events.

may be either tests of transactions, tests of balances, or analytical tests.

will increase proportionately with the auditor’s reliance on internal control.

Question 6. Question :

(TCO 9) The use of prenumbered sales invoices is meant to prevent

the failure to bill or record sales.

duplicate billings and recording of sales.

both A and B are correct.

neither A nor B is correct.

Question 7. Question :

(TCO 9) The auditor is concerned with authorization of sales transactions at three key points. Which of the following is not one of those points?

Credit authorization

Shipment of inventory to customers

Sales commission calculation

Sales prices

Question 8. Question :

(TCO 9) To achieve good internal control, which department should perform the activities of matching shipping documents with sales orders and preparing daily sales summaries?

Billing

Shipping

Credit

Payables

Question 9. Question :

(TCO 9) An auditor needs to determine whether all customers of an electric utility company are being billed. The auditor should test from the

sales register to the accounts receivable ledger.

sales register to the meter department records.

accounts receivable ledger to the sales ledger.

meter department records to the sales register.

Question 10. Question :

(TCO 9) A key internal control in the sales and collection cycle is the separation of duties between cash handling and record keeping. The objective most directly associated with this control is to verify that

cash receipts recorded in the cash receipts journal are reasonable.

cash receipts are properly classified.

recorded cash receipts result from legitimate transactions.

existing cash receipts are recorded.