California State University, Stanislaus

ACCOUNTING 4110

Chapter 11:

1)Which of the following is least likely to be considered an inherent risk relating to receivables and revenues?

2. Which of the following would provide the most assurance concerning the valuation of accounts receivable?
3. Which of the following is most likely to be an example of fraudulent financial reporting relating to sales?
4. Which of the following is an example of misappropriation of assets relating to sales?
5. The auditors should confirm accounts receivable unless the auditors’ assessment of the risk of material misstatement is low:
6. Under SEC rules, which of the following is not among the criteria that ordinarily exist for revenue to be recognized?
7. To determine that all sales have been recorded, the auditors would select a sample of transactions from the:
8. Which of the following would most likely be detected by an auditor’s review of the client’s sales cutoff?
9. To test the existence assertion for recorded receivables, the auditors would select a sample

from the:

10. Which assertion relating to sales is most directly addressed when the auditors compare a sample of shipping documents to related sales invoices?
11. Cooper, CPA, is auditing the financial statements of a small rural municipality. The receivable balances represent residents’ delinquent real estate taxes. Internal control at the municipality is weak. To determine the existence of the accounts receivable balances at the balance sheet date, Cooper would most likely:
12. Identify the control that is most likely to prevent the concealment of a cash shortage resulting from the improper write-off of a trade account receivable:

13. This simulation presents the Memo re Sales Invoice Procedures/Results relating to the Keystone Computers & Networks, Inc. (Keystone), audit. Background financial and other information on Keystone is included in Appendix 6C of Chapter 6. Callouts 1–4 of this simulation relate most directly to Chapters 10 and 11; Callouts 5–7 require knowledge of sampling, as presented in Chapter 9.

A staff member on your audit team has performed a portion of the audit plan for the audit of Keystone Computers & Networks Inc., a nonissuer. The procedures involved selecting a random sample of sales invoices from throughout the year and comparing them to the authorized customer list and to appropriate support related to the sale.