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1.
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Which of the following accounts in
a merchandising company is affected by both the revenue cycle and another cycle?
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a.
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sales
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b.
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sales returns and allowances
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c.
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inventory
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d.
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accounts receivable
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e.
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accounts payable
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2.
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The audit objective, “The accounts
receivable balance represents gross claims on customers and agrees with the
sum of the accounts receivable subsidiary ledger” is derived from the
assertion of:
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a.
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existence or occurrence
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b.
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completeness
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c.
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rights and obligations
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d.
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valuation or allocation
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e.
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presentation or disclosure
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3.
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All sales, cash receipts, and
sales adjustments are accurately valued using GAAP and correctly journalized,
summarized and posted are transaction objectives for:
a. occurrence
b. completeness
c. accuracy
d. cutoff
e. classification
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4.
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Disclosure objectives includes all
of the following except:
a.
occurrence and rights and obligations
b.
cutoff
c.
completeness
d.
classification and understandability
e.
accuracy and valuation
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5.
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The bonding of employees will
normally be expected to:
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a.
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“weed out” dishonest employees
already hired
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b.
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eliminate the need for separation
of duties in the cash receipts area
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c.
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guarantee that all employee fraud
will be prevented
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d.
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provide reasonable assurance that
all employees will perform their jobs with the utmost integrity
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e.
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serve as a deterrent to dishonesty
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6.
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A company policy states that
annual vacations are mandatory for all employees. This policy is most
important for employees who:
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a.
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are not bonded
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b.
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handle cash receipts
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c.
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maintain the detailed accounting
records
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d.
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have access to the general ledger
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e.
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serve as inventory clerks
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7.
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A company has a policy of rotating
employees’ assigned duties. This policy is most important for employees who:
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a.
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are not bonded
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b.
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maintain the detailed accounting
records
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c.
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handle cash receipts
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d.
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have access to the general ledger
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e.
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serve as inventory clerks
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8.
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Auditors should evaluate new
controls associated with all of the following except:
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a.
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new product lines
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b.
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new sources of revenues
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c.
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management’s response to new
accounting standards for revenue transactions
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d.
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related changes in personnel
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e.
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all of the above
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9.
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An understanding of the revenue
accounting system requires knowledge of all of the following except:
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a.
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how sales are initiated
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b.
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how goods and services are
delivered
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c.
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how payables are recorded
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d.
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how cash is received
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e.
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how sales adjustments are made
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10.
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In a credit-merchandising
environment, which of the following documents usually initiates the activity
in the sales cycle?
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a.
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shipping document
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b.
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customer order
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c.
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material requisition
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d.
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sales invoice
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e.
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sales order
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