AUDITING+ASSURANCE 12MONTH ACCESS CARD
17th Edition
ISBN: 9780135635131
Author: ARENS
Publisher: WILEY
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Chapter 14, Problem 28DQP
a.
To determine
Identify the option that an auditor would select a sample for internal controls are operated effectively to minimize instances of failures to invoice a shipment
b.
To determine
Identify an option that auditor would select a sample of items to obtain audit evidence about the uncollected items in customers’ accounts shown by trade receivables.
c.
To determine
Identify an option that an auditor would select to assess that the internal controls are effectively operated to minimize the chances of failure of posting invoices to customers’
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The following sales procedures were encountered duringthe annual audit of Marvel Wholesale Distributing Company:Customer orders are received by the sales order department. A clerk computes theapproximate dollar amount of the order and sends it to the credit department for approval.Credit approval is stamped on the order and sent to the accounting department. A computer isthen used to generate two copies of a sales invoice. The order is filed in the customer order file.The customer copy of the sales invoice is held in a pending file awaiting notification thatthe order was shipped. The shipping copy of the sales invoice is routed through the warehouse, and the shipping department has authority for the respective departments to releaseand ship the merchandise. Shipping department personnel pack the order and manuallyprepare a three-copy bill of lading: The original copy is mailed to the customer, the secondcopy is sent with the shipment, and the other is filed in sequence in the bill of…
The following are audit procedures in the sales and collectioncycle:1. Add the columns on the aged trial balance and compare the total with the generalledger.2. Examine a sample of shipping documents to determine whether each has a salesinvoice number included on it.3. Examine a sample of customer orders and see if each has a credit authorization.4. Compare the date on a sample of shipping documents a few days before and afterthe balance sheet date with related sales journal transactions.5. Discuss with the sales manager whether any sales allowances have been grantedafter the balance sheet date that may apply to the current period.6. Observe whether the controller makes an independent comparison of the total inthe general ledger with the trial balance of accounts receivable.7. Compare the date on a sample of shipping documents throughout the year withrelated duplicate sales invoices and the accounts receivable master file.8. Compute the ratio of allowance for uncollectible accounts…
The following are examples of audit procedures:
Watch employees count inventory to determine whether company procedures are being followed.
Count a sample of inventory items and record the amount in the audit files.
Calculate the ratio of sales commission expense to sales as a test of sales commissions.
Review the accounts receivable with the credit manager to evaluate their collectability.
Compare a duplicate sales invoice with the sales journal for customer name and amount.
Obtain a written statement from a bank stating that the client has $15,671 on deposit and liabilities of $500,000 on a demand note.
Add the sales journal entries to determine whether they were correctly totaled.
Obtain a letter from the client’s attorney addressed to the CPA firm stating that the attorney is not aware of any existing lawsuits.
Extend the cost of inventory times the quantity on an inventory listing to test whether it is accurate.
Obtain a letter from an…
Chapter 14 Solutions
AUDITING+ASSURANCE 12MONTH ACCESS CARD
Ch. 14 - Describe the following documents and records and...Ch. 14 - Prob. 2RQCh. 14 - Prob. 3RQCh. 14 - Prob. 4RQCh. 14 - Prob. 5RQCh. 14 - Prob. 6RQCh. 14 - Prob. 7RQCh. 14 - Prob. 8RQCh. 14 - Prob. 9RQCh. 14 - Prob. 10RQ
Ch. 14 - Prob. 11RQCh. 14 - Prob. 12RQCh. 14 - Prob. 13RQCh. 14 - Prob. 14RQCh. 14 - Prob. 15RQCh. 14 - Prob. 16RQCh. 14 - Prob. 17RQCh. 14 - Prob. 18RQCh. 14 - Prob. 19RQCh. 14 - Prob. 20.1MCQCh. 14 - Prob. 20.2MCQCh. 14 - Prob. 20.3MCQCh. 14 - Prob. 21.1MCQCh. 14 - An auditor is performing substantive tests of...Ch. 14 - Prob. 22.3MCQCh. 14 - Prob. 23.1MCQCh. 14 - Prob. 23.2MCQCh. 14 - Prob. 23.3MCQCh. 14 - Prob. 24DQPCh. 14 - Prob. 25DQPCh. 14 - Prob. 26DQPCh. 14 - Prob. 27DQPCh. 14 - Prob. 28DQPCh. 14 - Prob. 29DQPCh. 14 - Prob. 30DQPCh. 14 - Prob. 31DQPCh. 14 - Prob. 32DQPCh. 14 - Prob. 33DQPCh. 14 - Prob. 34DQPCh. 14 - Prob. 37ICA
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