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Acc 406 Test 2 Prep
Terms in this set (10)
Analytical procedures can be used to address overall reasonableness of transactions or account balances?
You are concerned that the clients allowance for doubtful accounts is understated due to sales to customers who are experiencing financial difficulties.
Days outstanding in accounts receivable
You are evaluating the need to issue a going concern opinion and want to assess the feasibility of managements plan to get an additional long term line of credit from the bank
Times Interest Earned
You are concerned that year end sales were recorded before inventory was shipped and that perhaps the inventory account was credited in the following year
Gross profit percentage
What is a true statement regarding the audit of a private entity?
Auditors must test controls for assertions where planned control risk is significantly below the maximum (ie. significantly below 100%) and where they plan to rely on the controls to reduce substantive testing.
Compare this year's gross margin percentage with the industry average gross margin percentage, is an example of?
Examine a randomly selected sample of purchase orders for indication of approval by appropriate supervisor, is an example of?
Test of Control
Request a bank confirmation for the client's cash balance on deposit at the bank, is an example of?
Test of Account Balance
Select a sample of sales invoices. For each invoice, compare items and quantities billed to a corresponding customer purchase order and shipping documents, noting any differences. Recalculate account billed based upon approved price list, is an example of?
Substantive Test of Transaction
Inquire of Billing Department personnel about whether they account for all prenumbered sales invoice numbers, is an example of?
Test of Control
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