Auditing A Business Risk Approach With Cases 8th Edition By Rittenberg, L. E., Johnstone, K., Gramling – Test Bank
Chapter 10: Auditing Revenue and Related Accounts
Student: ___________________________________________________________________________
1. The revenue cycle considered by auditors includes the sales process but not cash collections.
FALSE
2. The revenue cycle involves the procedures in generating a sales order, shipping the products, recording the transaction and collecting the receivable.
TRUE
3. The shipping department confirms the shipment of goods by completing the packing slip and returning it to the purchasing department.
FALSE
4. Monthly statements provide a detailed list of the customer’s activity for the previous month and a listing of all open items.
TRUE
5. Invoices are processed, including their mailing to customers, only subsequent to proof of valid delivery to customers.
TRUE
6. The use of prenumbered sales invoices is the primary control procedure to satisfy the assertion of completeness.
FALSE
7. A comprehensive chart of accounts and a review of complex or unusual transactions by supervisory personnel are control procedures necessary for proper classification of accounts.
TRUE
8. Formal procedures for approving acceptance of returns that are beyond the warranty period are an appropriate control procedure for identifying and recording returned goods.
TRUE
9. One of the benefits of establishing a formal credit policy for granting credit is that management does not need to perform monitoring of accounts receivable.
FALSE
10. Monitoring of the revenue cycle may be accomplished partially through the use of exception reporting
TRUE
11. Monitoring is one of the five components of the COSO internal control framework.
TRUE
12. The audit team is required by auditing standards to make an ordinary presumption of the risk of fraud due to revenue misstatements on every engagement.
TRUE
