For effective internal control, the billing function should be performed by the
a. Accounting department.
b. Sales department.
c. Shipping department.
d. Credit and collection department.
Answer: A
CPA Exam
- Under which of the following circumstances would an auditor be most likely to intensify an examination of a $500 imprest petty cash fund?
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- Which of the following would detect an understatement of a purchase discount?
- Which of the following statements extracted from a client's lawyer's letter concerning litigation, claims, and assessments most likely would cause the auditor to request clarification?
- Which of the following procedures most likely could assist an auditor in identifying related-party transactions?
- Which of the following steps should an auditor perform first to determine the existence of related parties?
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- Which of the following statements is correct regarding the predictability of analytical procedures in a financial statement audit?
- Which of the audit procedures listed below would be least likely to disclose the existence of related-party transactions of a client during the period under audit?
- Which of the following is generally included or shown in the auditor's working papers for the audit of a nonpublic company?
- During the first part of the current fiscal year, the client company began dealing with certain customers on a consignment basis. Which of the following audit procedures is least likely to bring this new fact to the auditor's attention?
- An auditor who is engaged to examine the financial statements of a business enterprise will request a cutoff bank statement primarily in order to
- An example of a transaction which may be indicative of the existence of related parties is
- Which of the following items would most likely require an adjustment to the financial statements for the year ended December 31, year 1?
- When an auditor decides to confirm accounts receivable balances rather than individual invoices, it most likely would be beneficial to include with the confirmations
- The audit working papers often include a client-prepared, aged trial balance of accounts receivable as of the balance sheet date. This aging is best used by the auditor to
- Auditors should request that an audit client send a letter of inquiry to those attorneys who have been consulted concerning litigation, claims, or assessments. The primary reason for this request is to provide
- Which of the following management assertions is an auditor most likely testing if the audit objective states that all inventory on hand is reflected in the ending inventory balance?
- "In connection with an audit of our financial statements, management has prepared, and furnished to our auditors a description and evaluation of certain contingencies." The forgoing passage most likely is from a(n)
- Which of the following analyses appearing in a predecessor's working papers is the successor auditor least likely to be interested in reviewing?
- Which of the following procedures would an auditor most likely perform prior to the balance sheet date?
- A client's procurement system ends with the assumption of a liability and the eventual payment of the liability. Which of the following best describes the auditor's primary concern with respect to liabilities resulting from the procurement system?
- When title to merchandise in transit has passed to the audit client, the auditor examining a vendor's invoices as a purchase cutoff on December 31, the last day of the client's year, will encounter the greatest difficulty in gaining assurance with respect to the