Ap Rev

1.
To determine whether internal control effectively minimized errors of failure to bill a customer
for a shipment, the auditor would select a sample of transactions from the population represented
by the
a. Customer order file.
b. Shipping records file.
c. Subsidiary customer accounts ledger.
d. Sales invoice.
2. Which of the following would the auditor consider to be an incompatible operation if the cashier
receives remittances from the mailroom?
a. The cashier posts the receipts to the accounts receivable subsidiary ledger.
b. The cashier makes the daily deposit at a local bank.
c. The cashier prepares the daily deposit.
d. The cashier endorses the checks. `
3. To verify that all sales transactions have been recorded, a test of transactions should be completed on a
representative sample drawn from
a. Entries in the sales journal.
b. The billing clerk's file of sales orders.
c. A file of duplicate copies of sales invoices for which all prenumbered forms in the series have been
accounted.
d. The shipping clerk's file of duplicate copies of shipping documents.
4. Tracing copies of sales invoices to shipping documents will provide evidence that all
a. Shipments to customers were recorded as receivables.
b. Billed sales were shipped.
c. Debits to the subsidiary accounts receivable ledger are for sales shipped.
d. Shipments to customers were billed
5. To gather audit evidence about the proper credit approval of sales, the auditor would select a sample of
documents from the population represented by the
a. Customer order file. c. Subsidiary customers' accounts ledger.

b. Bill of lading file. d. Sales invoice file.
6. The purpose of tests of controls over shipping is to

a. Determine whether billed goods have been shipped.
b. Determine whether shipments are billed.
c. Determine whether shipping department personnel are competent.
d. Determine whether credit is approved before goods are shipped.
7.The purpose of tests of controls over billing is to
a.Determine whether billed goods have been shipped.
b.Determine whether shipments are billed.
c. Determine whether billing department personnel are competent.
d.Determine whether credit is approved before goods are billed.
8. Which of the following is not a common activity of the revenue/receipt cycle?
a. Order entry. c. Receiving.

b. Inventory control. d. Cash collection.
9. To achieve control when there is no Billing Department, the billing function should be performed by the
a. Accounting Department. c. Shipping Department.

b. Sales Department. d. Credit and Collection Department.
10. The person who opens the mail commonly prepares a remittance advice when a customer fails to return one
with a payment. Consequently, mail should be opened by the:
a. Credit manager.
b. Receptionist.
c. Sales manager.
d. Accounts receivable clerk.
11. Which of the following control procedures will likely prevent the concealment of a cash shortage that was
perpetrated by improperly writing off a trade account receivable?
a. Write-offs must be approved by a responsible officer after reviewing Credit Department
recommendations and supporting evidence.
b. Write-offs must be supported by an aging schedule showing that only receivables months overdue have
been written off.
c. Write-offs must be approved by the cashier.
d. Write-offs must be authorized by field sales representatives.
12. Which of the following would best protect a company that wishes to prevent lapping?
a. Segregate duties so that accounting has no access to incoming mail.
b. Segregate duties so that no employee has access both to checks from customers and to currency from
daily cash receipts.
c. Have customers send payments directly to the company's bank.
d. Request that customers checks be made payable to the company and be addressed to the treasurer.
13. During the review of a small owner managed company's internal controls, the auditor discovers that the
accounts receivable clerk approves credit memos and has access to cash. Which of the following controls
would offset this deficiency?
a. The owner reviews errors in billings to customers and postings to subsidiary records.
b. The controller receives the monthly bank statement directly and reconciles the checking accounts.
c. The owner reviews credit memos after they are recorded.
d. The controller reconciles the detailed receivables records to the general ledger.
14. Defective merchandise returned by customers should be presented to
a. Inventory control personnel. c. Purchasing personnel.

b. Sales personnel. d. Receiving personnel.
15. Which of the following might be detected by an auditor's review of the client's sales cut-off?
a. Excessive goods returned for credit.
b. Unrecorded sales discounts.
c. Lapping of year end accounts receivable.
d. Inflated sales for the year.
16. Which department executes the sales transactions?
a. Sales department under the sales manager
b. Credit department under the credit manager
c. Billing department under the billing clerk
d. Treasury department under the treasurer
17. For most firms, the function of indicating credit approval is recorded on the
a. Bill of lading c. Sales invoices

b. Sales order d. Customer order
18. Immediately upon receiving check from customer by mail, a responsible employee should
a. Record the checks in the receipts journal
b. Add the checks to the daily cash summary
c. Prepare a duplicate listing of checks received
d. Verify that each check is supported by a pre-numbered sales invoice
19. A remittance listing of checks received is accomplished in two copies. One copy is forwarded to the cashier
(together with the check). A copy of the listing should be sent to the
a. Internal auditor to investigate the listing for unusual transactions
b. Treasurer to compare the listing with the monthly bank statement
c. Accounts receivable bookkeeper to update subsidiary accounts receivable records
d. Entity’s bank to compare the listing with the cashier’s deposit slip
20. Standard control procedures over customer remittances received through the mail include the policy of
having the mailroom personnel
a. Forwards the remittances, unopened, directly to the cashier
b. Forwards the remittances, unopened, directly to the accounts receivable records
c. Opens the mail, restrictively endorse the checks, and then prelists each remittance in triplicate copies
d. Opens the mail, restrictively endorses the checks, then, forward the remittances directly to the account
receivable clerk

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1.

a. Customer order file. c. Subsidiary customers' accounts ledger.

6. The purpose of tests of controls over shipping is to

a. Order entry. c. Receiving.

a. Accounting Department. c. Shipping Department.

a. Inventory control personnel. c. Purchasing personnel.

a. Bill of lading c. Sales invoices

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