Which of the following is not a principal objective of the auditor in the examination of revenues?
To verify cash deposited during the year.
To evaluate internal control, with particular emphasis on the use of accrual accounting to record revenue.
To verify that earned revenue has been recorded, and recorded revenue has been earned.
To identify and interpret significant trends and variations in the amounts of various categories of revenue.
Which of the following procedures would ordinarily be expected to best reveal unrecorded sales at the balance sheet date?
Compare shipping documents with sales records.
Apply gross profit rates to inventory disposed of during the period.
Trace payments received subsequent to the balance sheet date.
Send accounts receivable confirmation requests.
If accounts receivable turned over 7.1 times in 1979 as compared to only 5.6 times in 1980, it is possible that there were
Unrecorded credit sales in 1980.
Unrecorded cash receipts in 1979.
More thorough credit investigations made by the company late in 1979.
Fictitious sales in 1980.
Lapping would most likely be detected by
Examination of canceled checks clearing in the bank cut-off period.
Confirming year-end bank balances.
Preparing a schedule of interbank transfers.
Investigating responses to accounts receivable confirmations.
When there are a large number of relatively small account balances, negative confirmation of A/R is feasible if I/C is
Strong, and the individuals receiving the confirmation requests are unlikely to give them adequate consideration.
Weak, and the individuals receiving the confirmation requests are likely to give them adequate consideration.
Weak, and the individuals receiving the confirmation requests are unlikely to give them adequate consideration
Strong, and the individuals receiving the confirmation requests are likely to give them adequate consideration.
