Which of the following fraudulent activities most likely could be perpetrated due to the lack of effective internal controls in the revenue cycle? a. Fictitious transactions may be recorded that cause an understatement of revenues and overstatement of receivables b. Claim received from customers for goods returned may be intentionally recorded in other customer’s accounts. c. Authorization of credit memos by personnel who receive cash may permit the misappropriation of cash d. The failure to prepare shipping documents may cause an overstatement of inventory balances
Which of the following fraudulent activities most likely could be perpetrated due to the lack of effective internal controls in the revenue cycle? a. Fictitious transactions may be recorded that cause an understatement of revenues and overstatement of receivables b. Claim received from customers for goods returned may be intentionally recorded in other customer’s accounts. c. Authorization of credit memos by personnel who receive cash may permit the misappropriation of cash d. The failure to prepare shipping documents may cause an overstatement of inventory balances
Auditing: A Risk Based-Approach to Conducting a Quality Audit
10th Edition
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Chapter9: Auditing The Revenue Cycle
Section: Chapter Questions
Problem 20MCQ
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Which of the following fraudulent activities most likely could be perpetrated due to the lack of effective internal controls in the revenue cycle?
a. Fictitious transactions may be recorded that cause an understatement of revenues and overstatement of receivables
b. Claim received from customers for goods returned may be intentionally recorded in other customer’s accounts.
c. Authorization of credit memos by personnel who receive cash may permit the misappropriation of cash
d. The failure to prepare shipping documents may cause an overstatement of inventory balances
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