SOLVED

Learning Objective 14-3 1) When designing audit procedures, tracing of source documents to the customers subsidiary ledger and subsequently to the general ledger is done to satisfy what assertion? A) valuation B) cutoff C) completeness D) classification 2) Which of the following documents is not commonly associated with the “cash receipts” class of transactions? A) Remittance advice B) Sales order C) Prelisting of cash receipts D) Cash receipts journal or listing 3) When sales invoices are automatically calculated and posted by a computer, the auditor may be able to reduce substantive tests of transactions for which, if any, assertion? A) accuracy B) existence C) completeness D) none of the above 4) In many audits, no substantive tests of transactions are made for the ________ assertion on the grounds that understatement of sales is not a concern. A) accuracy B) existence C) completeness D) none of the above 5) Which one the following procedures performed for the billing function provides evidence for the completeness assertion? A) Making sure that all shipments have been billed. B) Making sure that no shipment has been billed more than twice. C) Making sure that each shipment is billed at the correct amount. D) Making sure that each shipment is billed to the proper customer. 6) Which of the following procedures performed for the billing function may provide evidence that the accounts receivable subsidiary ledger is in agreement with the accounts receivable control account? A) Making sure that all shipments have been billed. B) Making sure that no shipment has been billed more than twice. C) Making sure that each shipment is billed at the correct amount. D) Making sure that each shipment is billed to the proper customer. 7) The document that the accounting staff will use as the primary basis for recording sales transactions and updating the customers accounts receivable subsidiary ledger is the: A) sales order. B) bill of lading. C) sales journal. D) sales invoice. 8) In determining the level of audit efficiency, once the auditor has identified the key internal controls and identified any deficiencies in order to determine the level of control risk appropriate for a private company client, it is appropriate to decide whether: A) substantive tests can be reduced sufficiently to justify costs of performing tests of controls. B) substantive tests can be increased sufficiently to justify costs of performing tests of controls. C) tests of controls can be increased sufficiently to justify costs of performing substantive tests. D) tests of controls can be reduced sufficiently to justify costs of performing substantive tests. 9) Which one of the following statements is true? In deciding on substantive tests of transactions: A) some procedures are commonly employed on every audit regardless of the circumstances. B) all procedures are dependent on the adequacy of the controls and the results of the tests of controls. C) results obtained in the prior year’s audit will not affect the procedures used this year. D) the materiality of the item will not influence the choice of procedures used. 10) To test for recorded sales for which there were no actual shipments, the auditor vouches from the: A) bill of lading to the sales journal. B) sales journal to the shipping documents. C) sales journal to the accounts receivable subsidiary ledger. D) bill of lading to the supporting customer order and sales order.