Question

1. To test for recorded sales for which there were no actual shipment, the auditor works from the?

a. shipping documents to the sales journal

b. sales journal to the shipping document

c. sales journal to the accounts receivable subsidiary ledger

d. shipping document to the supporting customer order and sales order

2. Other factors equal, detection risk is ______ related to control risk and ______ related to the amount of audit evidence.

a. directly, inversely

b. directly, directly

c. inversely, inversely

d. inversely, directly

3. It is important that sales be billed and recorded in the journal as soon as possible after

a. the order is received

b. the order is received and credit is approved

c. credit is approved and it is verified that there is enough inventory to fill the order

d. shipment takes place

4. The auditor is performing vouching when he/she proceeds

a. from canceled checks to the cash disbursement journal

b. from duplicate bank deposit slips to the cash receipts journal

c. from the sales journal to customer purchase order

d. from shipping documents to the sales journal

5. The receipt of goods purchased in the normal course of business represents the date clients normally recognize

a. income

b. a receivable

c. an expense

d. a liability

Answer 1

Answer : 1. - b

The auditor should check the sales journal with the shipping document as the goods are not shifted the stock in Goodwin remains same

2. - b

Detection risk is indirectly related to COMPETENCE and reliability of audit evidence.

3. C

4. B

As daiiy cash receipts are deposited into bank the auditor to cross verify bank passbook

5. D

Being goods purchased in ordinary course of business is shown in liability ( it has been assumed that it is credit purchases)