Principles Of Auditing & Other Assurance Services 21st Edition By Ray Whittington – Test Bank

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Edition: 21st Edition

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Principles Of Auditing & Other Assurance Services 21st Edition By Ray Whittington – Test Bank

Chapter 11 Accounts Receivable, Notes Receivable, and Revenue

1) The department approving a sales transaction should be the billing department.

Answer: FALSE
Difficulty: 1 Easy
Topic: Receivables
Learning Objective: 11-03 Describe the documents, records, and accounts that compose the revenue (sales) transactions cycle and the fundamental controls over receivables and revenue.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

2) Accounts receivable that are written off should not be turned over to a collection agency.

3) An aged trial balance of accounts receivable may provide evidence on the adequacy of the allowance for uncollectible accounts.

Answer: TRUE
Difficulty: 1 Easy
Topic: Audit of Receivables and Revenue
Learning Objective: 11-06 Assess the risks of material misstatement of receivables and revenue and design further audit procedures, including tests of controls and substantive procedures, to address the risks.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

4) Confirmation of accounts receivable by direct communication with the debtor tests the existence of accounts receivable.

Answer: FALSE
Difficulty: 2 Medium
Topic: Audit of Receivables and Revenue
Learning Objective: 11-06 Assess the risks of material misstatement of receivables and revenue and design further audit procedures, including tests of controls and substantive procedures, to address the risks.
Bloom’s: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

6) CPAs use positive accounts receivable confirmation requests more frequently than negative accounts receivable confirmation requests.

Answer: TRUE
Difficulty: 2 Medium
Topic: Audit of Receivables and Revenue
Learning Objective: 11-06 Assess the risks of material misstatement of receivables and revenue and design further audit procedures, including tests of controls and substantive procedures, to address the risks.
Bloom’s: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

7) Confirmation of accounts receivable provides absolute assurance that no lapping or other manipulation affecting accounts receivable is being carried on.

8) Analytical procedures are used by auditors to gain evidence about the adequacy of the allowance for uncollectible accounts.

9) When it is impossible to confirm accounts receivable, the auditors may be able to satisfy themselves as to the existence of accounts receivable by alternative procedures.

10) Material accounts receivable from related parties should be stated separately from other receivables.

Principles Of Auditing & Other Assurance Services 21st Edition By Ray Whittington – Test Bank

Principles Of Auditing & Other Assurance Services 21st Edition By Ray Whittington – Test Bank

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Principles Of Auditing & Other Assurance Services 21st Edition By Ray Whittington – Test Bank

Principles Of Auditing & Other Assurance Services 21st Edition By Ray Whittington – Test Bank

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