Auditing & Assurance Services, Messier 8e
1. Analytical Procedures: Evaluation of financial information through analysis
of plausible relationships among both financial and nonfinancial data.
2. Application Controls: Controls that apply to the processing of specific
computer applications and are part of the computer programs in the accounting
system.
3. Confirmation: 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.
4. General Controls: Controls that relate to the overall information processing
environment and have a pervasive effect on the entity's computer operations.
5. Lapping: The process of covering a cash shortage by applying cash from
one customer's account receivable against another customer's accounts
receivable.
6. Negative Confirmation: A confirmation request to which the recipient
responds only if the amount or information stated is incorrect.
7. Positive Confirmation: A confirmation request to which the recipient
responds whether or not he or she agrees with the amount or information stated.
8. Reliance Strategy: The auditor's decision to rely on the entity's controls, test
those controls, and reduce the direct test of the financial statement accounts.
9. Substantive tests of transactions: Test to detect errors or fraud in
individual transactions.
10. Test of controls: Audit procedures performed to test the operating
effectiveness of controls in preventing or detecting material misstatements at the
relevant assertion level.
11. Test of details of account balances and disclosures: Tests that
concentrate on the details of amounts contained in an account balance and in
disclosures
12. Assertions: Expressed of implied representations by management that are
reflected in the financial statement components.
, Auditing & Assurance Services, Messier 8e
13. Which of the following actions would best conceal the theft of cash
collections from sales on account?: Understating the sales journal amounts.
14. 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: Bill of lading (shipping report) file
15. Which of the following is not a factor that an auditor would consider
when assessing the inherent risk associated with client sales transactions?:
The nature of the credit authorization process.
16. Tracing bills of lading (shipping reports) to sales invoices as a test of
controls related to the sales and collection process provides evidence that:
Customers were billed for goods shipped to them.
17 Customers are more likely to complain to the client if which of the
following assertions for cash receipts is violated?: Completeness.
18. Which of the following would not be considered a test in the area of
accounts receivable that relates to the existence assertion?: Trace the record
of shipping to inclusion in the accounts receivable subsidiary ledger.
19. Which of the following comparisons would be most useful to an auditor
in evaluating the overall results of an entity's sales efforts?: Current year
sales to current year budgeted sales.
20. 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: Valuation or allocation.
21. 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?: Inspect related shipping
records and sales invoices documenting the merchandise sold to customers.
1. Analytical Procedures: Evaluation of financial information through analysis
of plausible relationships among both financial and nonfinancial data.
2. Application Controls: Controls that apply to the processing of specific
computer applications and are part of the computer programs in the accounting
system.
3. Confirmation: 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.
4. General Controls: Controls that relate to the overall information processing
environment and have a pervasive effect on the entity's computer operations.
5. Lapping: The process of covering a cash shortage by applying cash from
one customer's account receivable against another customer's accounts
receivable.
6. Negative Confirmation: A confirmation request to which the recipient
responds only if the amount or information stated is incorrect.
7. Positive Confirmation: A confirmation request to which the recipient
responds whether or not he or she agrees with the amount or information stated.
8. Reliance Strategy: The auditor's decision to rely on the entity's controls, test
those controls, and reduce the direct test of the financial statement accounts.
9. Substantive tests of transactions: Test to detect errors or fraud in
individual transactions.
10. Test of controls: Audit procedures performed to test the operating
effectiveness of controls in preventing or detecting material misstatements at the
relevant assertion level.
11. Test of details of account balances and disclosures: Tests that
concentrate on the details of amounts contained in an account balance and in
disclosures
12. Assertions: Expressed of implied representations by management that are
reflected in the financial statement components.
, Auditing & Assurance Services, Messier 8e
13. Which of the following actions would best conceal the theft of cash
collections from sales on account?: Understating the sales journal amounts.
14. 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: Bill of lading (shipping report) file
15. Which of the following is not a factor that an auditor would consider
when assessing the inherent risk associated with client sales transactions?:
The nature of the credit authorization process.
16. Tracing bills of lading (shipping reports) to sales invoices as a test of
controls related to the sales and collection process provides evidence that:
Customers were billed for goods shipped to them.
17 Customers are more likely to complain to the client if which of the
following assertions for cash receipts is violated?: Completeness.
18. Which of the following would not be considered a test in the area of
accounts receivable that relates to the existence assertion?: Trace the record
of shipping to inclusion in the accounts receivable subsidiary ledger.
19. Which of the following comparisons would be most useful to an auditor
in evaluating the overall results of an entity's sales efforts?: Current year
sales to current year budgeted sales.
20. 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: Valuation or allocation.
21. 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?: Inspect related shipping
records and sales invoices documenting the merchandise sold to customers.
