Solution Manual For Auditing & Assurance Services: A
Systematic Approach, 12th Edition By William Messier Jr,
Steven Glover, Verified Chapters 1 - 21, Complete Newest
Version
Analytical Procedures - ANSWER: Evaluation of financial information through analysis
of plausible relationships among both financial and nonfinancial data.
Application Controls - ANSWER: Controls that apply to the processing of specific
computer applications and are part of the computer programs in the accounting
system.
Confirmation - ANSWER: An external confirmation represents audit evidence
obtained by the auditor as a direct written response to the auditor from a third party
(the confirming party) in paper form or by electronic or other medium.
General Controls - ANSWER: Controls that relate to the overall information
processing environment and have a pervasive effect on the entity's computer
operations.
Lapping - ANSWER: The process of covering a cash shortage by applying cash from
one customer's account receivable against another customer's accounts receivable.
Negative Confirmation - ANSWER: A confirmation request to which the recipient
responds only if the amount or information stated is incorrect.
Positive Confirmation - ANSWER: A confirmation request to which the recipient
responds whether or not he or she agrees with the amount or information stated.
Reliance Strategy - ANSWER: The auditor's decision to rely on the entity's controls,
test those controls, and reduce the direct test of the financial statement accounts.
Substantive tests of transactions - ANSWER: Test to detect errors or fraud in
individual transactions.
Test of controls - ANSWER: Audit procedures performed to test the operating
effectiveness of controls in preventing or detecting material misstatements at the
relevant assertion level.
Test of details of account balances and disclosures - ANSWER: Tests that concentrate
on the details of amounts contained in an account balance and in disclosures
Assertions - ANSWER: Expressed of implied representations by management that are
reflected in the financial statement components.
, Which of the following actions would best conceal the theft of cash collections from
sales on account? - ANSWER: Understating the sales journal amounts.
To determine whether the client's internal control operated effectively to minimize
the likelihood of failing to bill a customer for a shipment of goods, the auditor should
begin by selecting a sample of transactions from the population represented by the -
ANSWER: Bill of lading (shipping report) file
Which of the following is not a factor that an auditor would consider when assessing
the inherent risk associated with client sales transactions? - ANSWER: The nature of
the credit authorization process.
Tracing bills of lading (shipping reports) to sales invoices as a test of controls related
to the sales and collection process provides evidence that - ANSWER: Customers
were billed for goods shipped to them.
Customers are more likely to complain to the client if which of the following
assertions for cash receipts is violated? - ANSWER: Completeness.
Which of the following would not be considered a test in the area of accounts
receivable that relates to the existence assertion? - ANSWER: Trace the record of
shipping to inclusion in the accounts receivable subsidiary ledger.
Which of the following comparisons would be most useful to an auditor in evaluating
the overall results of an entity's sales efforts? - ANSWER: Current year sales to
current year budgeted sales.
An auditor's purpose in reviewing credit ratings of customers with delinquent
accounts receivable is most likely to obtain evidence concerning management's
assertions relating to - ANSWER: Valuation or allocation.
Which of the following procedures would an auditor most likely perform related to
year-end accounts receivable confirmations when the auditor does not receive
replies even after second requests? - ANSWER: Inspect related shipping records and
sales invoices documenting the merchandise sold to customers.
According to SAB 101, which of the following is not a criteria for revenue
recognition? - ANSWER: Cash is received.
Which of the following is not a key segregation of duties in the revenue process? -
ANSWER: The accounts receivable function should be segregated from the invoice
preparation function.
Which of the following is the population the auditor is most likely to draw from in
order to test the cutoff assertion for revenue? - ANSWER: Shipping documents.
Systematic Approach, 12th Edition By William Messier Jr,
Steven Glover, Verified Chapters 1 - 21, Complete Newest
Version
Analytical Procedures - ANSWER: Evaluation of financial information through analysis
of plausible relationships among both financial and nonfinancial data.
Application Controls - ANSWER: Controls that apply to the processing of specific
computer applications and are part of the computer programs in the accounting
system.
Confirmation - ANSWER: An external confirmation represents audit evidence
obtained by the auditor as a direct written response to the auditor from a third party
(the confirming party) in paper form or by electronic or other medium.
General Controls - ANSWER: Controls that relate to the overall information
processing environment and have a pervasive effect on the entity's computer
operations.
Lapping - ANSWER: The process of covering a cash shortage by applying cash from
one customer's account receivable against another customer's accounts receivable.
Negative Confirmation - ANSWER: A confirmation request to which the recipient
responds only if the amount or information stated is incorrect.
Positive Confirmation - ANSWER: A confirmation request to which the recipient
responds whether or not he or she agrees with the amount or information stated.
Reliance Strategy - ANSWER: The auditor's decision to rely on the entity's controls,
test those controls, and reduce the direct test of the financial statement accounts.
Substantive tests of transactions - ANSWER: Test to detect errors or fraud in
individual transactions.
Test of controls - ANSWER: Audit procedures performed to test the operating
effectiveness of controls in preventing or detecting material misstatements at the
relevant assertion level.
Test of details of account balances and disclosures - ANSWER: Tests that concentrate
on the details of amounts contained in an account balance and in disclosures
Assertions - ANSWER: Expressed of implied representations by management that are
reflected in the financial statement components.
, Which of the following actions would best conceal the theft of cash collections from
sales on account? - ANSWER: Understating the sales journal amounts.
To determine whether the client's internal control operated effectively to minimize
the likelihood of failing to bill a customer for a shipment of goods, the auditor should
begin by selecting a sample of transactions from the population represented by the -
ANSWER: Bill of lading (shipping report) file
Which of the following is not a factor that an auditor would consider when assessing
the inherent risk associated with client sales transactions? - ANSWER: The nature of
the credit authorization process.
Tracing bills of lading (shipping reports) to sales invoices as a test of controls related
to the sales and collection process provides evidence that - ANSWER: Customers
were billed for goods shipped to them.
Customers are more likely to complain to the client if which of the following
assertions for cash receipts is violated? - ANSWER: Completeness.
Which of the following would not be considered a test in the area of accounts
receivable that relates to the existence assertion? - ANSWER: Trace the record of
shipping to inclusion in the accounts receivable subsidiary ledger.
Which of the following comparisons would be most useful to an auditor in evaluating
the overall results of an entity's sales efforts? - ANSWER: Current year sales to
current year budgeted sales.
An auditor's purpose in reviewing credit ratings of customers with delinquent
accounts receivable is most likely to obtain evidence concerning management's
assertions relating to - ANSWER: Valuation or allocation.
Which of the following procedures would an auditor most likely perform related to
year-end accounts receivable confirmations when the auditor does not receive
replies even after second requests? - ANSWER: Inspect related shipping records and
sales invoices documenting the merchandise sold to customers.
According to SAB 101, which of the following is not a criteria for revenue
recognition? - ANSWER: Cash is received.
Which of the following is not a key segregation of duties in the revenue process? -
ANSWER: The accounts receivable function should be segregated from the invoice
preparation function.
Which of the following is the population the auditor is most likely to draw from in
order to test the cutoff assertion for revenue? - ANSWER: Shipping documents.
