Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Question
Chapter 16, Problem 24DQP
a.
To determine
Identify the balance related audit objective or objectives that satisfies partially or fully for each
b.
To determine
List the order in which the auditor perform the seven procedures of audit and briefly these procedures.
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The following are common tests of details of balances or analyticalprocedures for the audit of accounts receivable:1. Request 30 positive and 50 negative confirmations of accounts receivable.2. Select 10 customer accounts from the accounts receivable master file and trace tothe aged accounts receivable listing to verify name and amount.3. Select 10 customer accounts from the aged accounts receivable listing and trace tothe accounts receivable master file for name, amount, and aging categories.4. Obtain a list of aged accounts receivable, foot and cross-foot the list, and trace thetotal to the general ledger.5. Compute accounts receivable turnover for the current year and compare to theprior year.6. Perform alternate procedures on accounts not responding to second requests byexamining subsequent cash receipts documentation and shipping reports or salesinvoices.a. For each audit procedure, identify the balance-related audit objective or objectives itpartially or fully satisfies.b. In…
Which of the following audit procedures will
best uncover an understatement of sales
and accounts receivables?
Select one:
O 1. Test a sample of sales transactions,
selecting the sample from pre
numbered shipping documents
O 2. Test a sample of sales transactions,
selecting the sample from sales
invoices recorded in the sales
journal
O 3. Confirm accounts receivable
4. Review the aged receivable trial
balance
Audit documentation often includes a client-prepared, aged trial balance of accounts receivable as of the balance sheet date. The audit team uses this aging primarily toa. Evaluate internal control over credit sales.b. Test the accuracy of recorded charge sales.c. Estimate credit losses.d. Verify the existence of the recorded receivables.
Chapter 16 Solutions
Auditing And Assurance Services
Ch. 16 - Prob. 1RQCh. 16 - Prob. 2RQCh. 16 - Prob. 3RQCh. 16 - Prob. 4RQCh. 16 - Explain why you agree or disagree with the...Ch. 16 - Prob. 6RQCh. 16 - Prob. 7RQCh. 16 - Prob. 8RQCh. 16 - Prob. 9RQCh. 16 - Prob. 10RQ
Ch. 16 - Prob. 11RQCh. 16 - Under what circumstances is it acceptable to...Ch. 16 - Prob. 13RQCh. 16 - Prob. 14RQCh. 16 - Prob. 15RQCh. 16 - Prob. 16RQCh. 16 - Prob. 17RQCh. 16 - Prob. 18RQCh. 16 - Prob. 19RQCh. 16 - Prob. 20.1MCQCh. 16 - Prob. 20.2MCQCh. 16 - Prob. 20.3MCQCh. 16 - The following questions deal with confirmation of...Ch. 16 - Prob. 21.2MCQCh. 16 - Prob. 21.3MCQCh. 16 - Prob. 22.1MCQCh. 16 - Prob. 22.2MCQCh. 16 - Prob. 22.3MCQCh. 16 - Prob. 23.1MCQCh. 16 - Which of the following is least likely to be a...Ch. 16 - The following questions concern auditor...Ch. 16 - Prob. 24DQPCh. 16 - Prob. 25DQPCh. 16 - Prob. 26DQPCh. 16 - The following misstatements are sometimes found in...Ch. 16 - Prob. 28DQPCh. 16 - Prob. 29DQPCh. 16 - Prob. 30DQPCh. 16 - Prob. 31DQPCh. 16 - Prob. 32DQPCh. 16 - Prob. 33DQPCh. 16 - Prob. 34DQPCh. 16 - Prob. 35DQPCh. 16 - Prob. 36DQPCh. 16 - Prob. 38DQPCh. 16 - Prob. 39ICA
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Similar questions
- Which of the following procedures would an auditor most likely perform in searching for unrecorded liabilities? *A. Scan the cash disbursements entries recorded just before year end for indications of unusual transactions.B. Compare a sample of purchase orders issued just after year end with the year-end accounts payable trial balance.C. Obtain a copy of the receiving report until year end and its related sales invoice and trace them to the purchases journal.D. Compare the entries recorded in the purchases journal and the cash disbursements journal just before year end.arrow_forwardThe following are specific balance-related audit objectives applied to the audit of accounts receivable (a. through i.) and management assertions about account balances (1 through 6). The list referred to in the specific balance-related audit objectives is the list of the accounts receivable from each customer at the balance sheet date. i (Click the icon to view the audit objectives.) i (Click the icon to view the management assertions.) Requirement For each specific balance-related audit objective, identify the appropriate management assertion. (Hint: See table.) Specific balance-related audit objective There are no unrecorded receivables. b. Uncollectible accounts have been provided for. C. Receivables that have become uncollectible have been written off. d. All accounts on the list are expected to be collected within 1 year. The total of the amounts on the accounts receivable listing agrees with the general ledger balance for accounts receivable. a. e. Management assertionarrow_forwardWhen a sample of customer accounts receivable is selected for vouching debits, auditors will vouch them toa. Sales invoices with shipping documents and customer sales invoices.b. Records of accounts receivable write-offs.c. Cash remittance lists and bank deposit slips.d. Credit files and reports.arrow_forward
- To determine whether accounts payable are complete, auditors perform a test to verify that all merchandise received has been recorded. The population for this test consists of all Multiple Choice A. Receiving reports. B. Purchase orders. C. Canceled checks. D. Vendors’ invoices.arrow_forwardWhich of the following would provide an auditor with the most reliable evidence reguarding the existence of accounts receivable? A. A copy of the invoice sent to the customer. B. Acopy of the customer's sales order held by the client. C. An accounts receivable confirmation received by the auditor from the client's customer. D. An aging schedule showing the composition of the year-end-accounts receivable balance.arrow_forwardWhich of the following procedures would an auditor most likely perform in searching for unrecorded liabilities? O Compare a sample of purchase orders issued just after year-end with the year-end accounts payable trial balance. Trace a sample of accounts payable entries recorded just before year-end to the unmatched receiving report file. O Scan the cash disbursements entries recorded just before year-end for indications of unusual transactions. O Vouch a sample of cash disbursements recorded just after year-end to receiving reports and vendor invoices.arrow_forward
- Following are seven audit activities.a. Examine invoices supporting recorded fixed asset additions.b. Review industry databases to assess the risk of material misstatement in the financialstatements.c. Summarize misstatements identified during testing to assess whether the overallfinancial statements are fairly stated.d. Test computerized controls over credit approval for sales transactions.e. Send letters to customers confirming outstanding accounts receivable balances.f. Perform analytical procedures comparing the client with similar companies in theindustry to gain an understanding of the client’s business and strategies.g. Compare information on purchases invoices recorded in the acquisitions journalwith information on receiving reports.For each activity listed above, indicate in which phase of the audit the procedure waslikely performed.1. Plan and design an audit approach based on risk assessment procedures (Phase I)2. Perform tests of controls and substantive tests of…arrow_forwardAn auditor is likely to perform each of the below procedures to obtain evidence regarding the potential understatement of accounts payable at year-end (i.e., the Completeness assertion) except… Question options: Inspect purchase orders and receiving reports for accounts payable recorded at year-end. Inspect the open invoice file for invoices to be paid after year-end. All options describe procedures that can be used to identify a potential understatement of accounts payable. Analyze cash disbursements made during the first few weeks of the subsequent year and inspect supporting documentation for each disbursement.arrow_forwardWhich of the following test controls most likely would help assure an auditor that goods shipped are properly billed? A. Scan the sales journal for sequential and unusual entries. B. Examine shipping documents for matching sales invoice. C. Compare the accounts receivalbe ledger to daily sales summaries. D. inspect unused sales invoices for consecutive prenumbering.arrow_forward
- ut of estion Send letters to a sample of accounts receivable customers to verify whether they have an outstanding balance at December 31, 2016. Choose the Audit Objective: Choose the specific audit objectivearrow_forwardIndicate whether each of the following audit procedures is a testof controls, a substantive test, or a dual-purpose test. Next, indicate the financial statement assertion most closely related to each audit procedure. Required:a. Vouch recorded sales invoices to supporting shipping documents.b. Inspect recorded sales invoices for credit approval.c. Vouch recorded sales invoices prices to the approved price list.d. Send confirmations to all customers regarding accounts receivable.e. Recalculate the arithmetic accuracy of the recorded sales invoices.f. Compare the shipment date of recorded sales invoices with the invoice record date.g. Trace recorded sales invoices to posting in the general ledger control account and in the correct customer’s account.h. Select a sample of shipping documents from the shipping department file and trace shipments to recorded sales invoices.i. Scan recorded sales invoices and shipping documents for missing numbers in sequence.j. Vouch sales invoices and…arrow_forwardThe CPAs test of detail transactions included the following auditing procedures which were undertaken for a selected test-month: CASH RECEIPTS: Reconciled credits per bank statement with receipts per book. Traced deposits to remittance advices. Traced totals to the general ledger. Footed the cash book. CASH DISBURSEMENTS: E. Compared cancelled checks with check register for name, signature, payee and endorsement. F. Footed check register G. Traced totals to the general ledger. H. Examined invoices, cash vouchers and other documents supporting disbursements (other than payroll disbursements) I. Reconciled recorded disbursements with charges per bank statement. Directions: Below are presented some of the more common methods of concealing shortages. For each of these items, indicate the letter of the auditing procedure listed above which most likely to uncover the shortage. If the answer is "NONE", so state on the space provided. No. Items ANSWER 1. Check included in petty cash…arrow_forward
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