TqtC a, vt e

RgSA: The Roier Sdlool of A@untancy

T: AUDIT OF THE REYEJ{UE AED RECEIPT CYCLE

PROBLEM
,^1.Sendinqaccounts,eceiuable/ffineciiEnt.scuStomersiSconSiStentwiththeauditor,s
-i r' #;:,:ffi'J;;vatidating client's receivable assertion on: atS'?; l]: - !$SYi
a, Existence and rights
b. ComPleteness and valuation C^rt":lW+5i !h, -
c. ComPleteness and rights
d. Existence and valuation
positive confirmation request letter for a material amount'
Li I 2. what action should the auditors take if a reply to a
weeks of being sent out?
is not received from the customer within two or three
a. Send out a second request to thelack of sufficient appropriate audit evidence
customer'
b. q"rrirv il" audit opiniln due to department'
c. tnform the entity's internal audit
d. a;;iify the audii opinion due to material misstatement in the financial statement'
likely perform for year-end accounts confirmations
I 3. which of the following procedures would an auditor most
- -inspect
,iful,ro1^ whentheauditordidnotreceiverepliestosecondrequest? to customers'
,'''+;t') ;.
,llh=" tne gbippilrgjg:ods doc_umenting the merchandise sold
t*',", :d. tiHx,ffi ffi*,o,li:,TJ": J;i;l :#:::ffii[
Increase tne asseised level of detection risk for the
i".J,"il;"J3;., u :., _
existence assertion. 1 '
''2'gNu./r.::.'f : )wl; ,t.t,U
a. anegalivtf-connt'u[#-o'itz in^ln -)&r.ilr
;-i 4. whichof- a.
thefoilowingisro$€cLsraremeorregardingiheus:ofprovide
requ6sts rirgly significanlexplieit evidence' I'ti " ^ '"u'' t;
-

k:,* rJ ;1{ ,i{,cr Unreturnld negative confirmation

r / .rt''wji.
'#rf,i Jffim''q'ru.
;, ffiil:",#:,;iff*iii,ili[{i'*tffi*i#sr*E#r"'
/'\
;ffi:- "" Wgii t,',; ,rn- s;1'",, bt;.n .

usi3lth*lgl'form of confirmations of accounts

i \ 5. Under which of the following circumstances. would-th-e
receivablemostlikelybepreferabletopositjveconfirmatloL/ wiEhout devoting proper attention to them'
a. The recipien,r'"r"'rl[.iv';dtri9-;irl-E .""fi.."ti"'"s
ua0"lbtillJ*,,
' lil,;ni^ :: ;::r.u:ll5::uxllx.*tH:i:I'"X',{:;fli:Jii'}iq".,"d
i,,,^rd -" iq-!9ry.'
infi-erent risk and control 'risk
of ilrrsrsrrr , \ t't !r't-\ ei-
r..y,.,, ;, levEt ur
I a55e55eu level
ine lomnineo-iisesseo ::-_-;
c(*^,.ir{.,.8q$s
auditor decided to render a gales cu!-.off-by
<'-
6 As part of auditing the company's reve.nue/re.ceipt cycle, the
, invoice and the delivery receipt' wrricn or tne :h"t$\J''t'
source documents which include the sales oroe., inu sales
following is correct r"ugu'Oin;-tfo iates t't-lflntocedures? a' ;R{I
;;;; apg@il;;i .!^ !^'i,.o so urce rln.rr
to ihe on,,rra docu ments is
a. Vouch ng n,iiu',
i ;;;;;;i Ln." sheet
.date vouching entries
of receivables while
necessary " to gat_her evidence r."gurding existence assertion
ouvr.ifui,in" uii""i" sfreet aite to the source documents is necessary to gather
several
evidence .egSloing the completeness assertion of receivables.
Vouching entiies ieveral days before the balance sheet date to
the source documents is
b. assertion of receivables while vouching
necessary to gather evidence regarding completeness

:l*H"'""?#:itn'xlg"*:i*"::?*::ur"::"'udocumentsisnecessarvtosather
and after the balance sheet date to the source documents
c. Vouching
"ntii"i
Jeveral days before
is necessary to gather evidence regarding valuation assertion of receivables'
d. Vouching i"r"ral days befo-re thJbalance sheet date to the source documents
vouching
is
entries
"ntri"i regarding rights assertion of receivables while
necessary to gather evidence
is necessary to gather
several oays ifter the balance srreet aite to the source documents
evidence regarding the valuation assertion of receivables, ,.',
--aff1
,l:'-.
:,, 7. whichof thefollowingpopulationsshouldtheauditorstartformwhentestingforthecolnplP,"nf',of -i'(t:i[Di'\
.-'\0\''l(f

iares?
repoftedsatesofamanufacruringcompanyandroascertainthatallvalidsaiesa.ea!ffi#ftiffiri"o1o
!:i:*'i'-. ''"t:.r;ffiinr -^, *r
f F pr- et :"11*f %fin:[[?:fli['i'duo'u'
c. Sales invoices
d. Sales orders ,W liit.f;l.'+
; '; 8 Sa,es recordi::;1:?i.il.?i1i['"iffifii!":".,X'$Tffi:lii$['#ffiff rffiS5l','"':;stomers
b, Esture that shipnEnti to customers are billed'
c. oltermine whether payments are properly applied to customer accounts.
d. Dut"rin" whether unit prices billed are in accordance with sales contracts'
statement assertion of occurrence of sales
The auditor wants to obtain evi.denqe in support to the financial
),
9. receivable balance' The auditor would most likely
transactions and the correspondinsjlgtenie of the related
do which of the foilowing substantirG-iEEEFtbcedure?
a. Trace back journal entries to the sales journal to the sales invoice and shipping documents'
b. Trace the snipping documents and sales invorces to the entry in the sales journal'
c. Trace the appiou"a customer crders to the shrpping documents and the sales invoices'
,..mN'l l A \ a ..-q),