Audit Ch. 16 HW MC
Terms in this set (9)
As a result of analytical procedures, the auditor determines that the gross profit percentage has declined from 30% in the preceding year to 20% in the current year. The auditor should
Consider the possibility of a misstatement in the financial statements.
An auditor's preliminary analysis of accounts receivable turnover revealed the following rates over these accounting periods.
2013 - 4.3
2012 - 6.2
2011 - 7.3
Which of the following is the most likely cause of the decrease in accounts receivable turnover?
Liberalization of credit policy.
After a CPA has determined that accounts receivable have increased as a result of slow collections in a "tight money" environment, the CPA will be likely to
Expand tests of collectibility.
Which of the following procedures will an auditor most likely perform for year-end accounts receivable confirmations when the auditor did not receive replies to second requests?
Inspect the shipping records documenting the merchandise sold to the debtors.
The negative form of accounts receivable confirmation request is useful except when
Individual account balances are relatively large.
The return of a positive confirmation of accounts receivable without an exception attests to the
Accuracy of the receivable balance.
Which of the following will most likely provide the most assurance concerning the accuracy balance-related objective for accounts receivable?
Vouch amounts in the subsidiary ledger to details on shipping documents.
Which of the following audit procedures will best uncover an understatement of sales and accounts receivable?
Test a sample of sales transactions, selecting the sample from prenumbered shipping documents.
The confirmation of customers' accounts receivable rarely provides reliable evidence about the completeness assertion because
Customers may not be inclined to report understatement errors in their accounts.