Which of the following is not a method to overstate revenues and receivables?

According to SEC Staff Accounting Bulletin: No. 101 - Revenue Recognition in Financial Statements, revenue is realized when certain criteria are met. Which of the following is not one of those criteria?

	Persuasive evidence of an arrangement exists.
	Delivery has occurred or services have been rendered.
	The seller has invoiced the buyer for the price of the goods.
	The seller's price to the buyer is fixed or determinable.
	Collectivity is reasonably assured.

Question 2

	recording fictitious sales, recognizing revenue on shipments that were not made.
	early recognition of sales, recognizing revenue in the current year even though shipment of goods or providing the service occurs in the following year.
	recognizing cost of goods sold before the goods are invoiced.
	shipment of a larger quantity of goods than the customer ordered.
	recognition of revenue based on a swap (exchange) transactions, when the customer and the client exchanged products or services and both parties recognize revenue based on the exchange.

Question 3

	existence or occurrence - for account balances
	completeness - for account balances
	valuation and allocation - for account balances
	rights and obligations - for account balances
	accuracy - for classes of transactions and account balances
	both a and b
	both c and d

Question 4

Which of the following are key control procedures for the revenue business process?

	segregation of transaction trails
	authorization procedures
	documented duties
	independent transaction trails
	physical controls that limit access to assets
	both a and b
	both c and d
	both b and e

Question 5

In the revenue business process, the auditor might perform the following analytical procedures:

	Compare sales revenue, accounts receivable, sales returns and allowance, bad debt expense, and allowance for uncollectible accounts for the current year to the prior year. Investigate changes from the auditor's expectations that appear to be unreasonable.
	Compare sales revenue, accounts payable, sales returns and allowance, bad debt expense, and allowance for uncollectible accounts for the current year to the prior year. Investigate changes from the auditor's expectations that appear to be unreasonable.
	Calculate the accounts receivable turnover ratio and the number of days outstanding in accounts receivable for the current and prior years. Investigate a change from the auditor's expectations if it appears to be unreasonable.
	Calculate the accounts receivable turnover ratio and the number of days outstanding in accounts payable for the current and prior years. Investigate a change from the auditor's expectations if it appears to be unreasonable.
	Consider the number of vendor accounts for the current year and the prior year and new accounts added and lost in each year.
	both a and c
	both b and e

Question 6

The auditing standards presume that the auditor will request confirmation of the accounts receivable balances unless

	the balance in accounts receivable is immaterial
	the use of confirmations would be effective if the amounts were significant
	the auditor can reduce the risk of issuing an audit opinion to an acceptable low level without confirming accounts receivable
	the client believes that confirmations are not necessary

Question 7

It is the auditor's job to review the client's estimate to evaluate whether it has been determined in accordance with the applicable financial reporting framework. To do this, the auditor considers whether the allowance for doubtful accounts is properly valued based on

	the accounts written off during the current year
	the accounts receivable balance at the end of the prior year
	current economic conditions
	the economic status of past customers
	the net receivable balance that should represent the amount of cash the company expects to collect in the current year
	both a and c
	both b and d

Question 8

The auditing standards require the auditor to control the risk of material misstatement due to fraud to an acceptably low level.

True

False

Question 9

Which of the following are audit procedures used by the auditor to gather evidence?

Question 10

Which of the following is not a method the auditor can use to alter the evidence process related to risk?

	the auditor can change the nature of evidence
	the auditor can change the timing of the evidence
	the auditor can change the extent of evidence gathered in response to the risk assessment
	the auditor can change the reliability of evidence gathered in response to the risk assessment

Question 11

Significant findings are to be documented by the auditor, including actions taken to address them and the basis for the final conclusion reached. Findings that might be significant include

	accounting for complex or unusual transactions or accounting estimates or uncertainties
	results of audit procedures indicating that the financial statements or disclosure are not misstated or the need for an auditor to revise his previous assessment of the risk of misstatement
	circumstances that made it relatively easy for the auditor to apply auditing procedures
	findings that could result in modifications to management's report
	adjustments that the auditor has proposed to the financial statements
	both a and e
	both b and d
	both d and e

Question 12

The auditor should complete the assembly of the final audit file within 45 days of the report release date (60 days for private companies). After the 45/60 day time period

	the auditor should not delete or discard any information from the file
	new information can be added if necessary if accompanied by management's approval for the addition
	new information can be added if necessary if accompanied by the name of the person adding the information
	new information can be added if necessary if accompanied by the reissuance of the audit report
	new information can be added if necessary if the information was inadvertently omitted during the course of the audit
	both a and c
	both a and e

Question 13

	suggesting fictitious journal entries (particularly at year end)
	inappropriately changing assumptions and methods used to estimate account balances
	omitting, advancing, or delaying modification of events that occurred during the reporting period
	failing to disclose facts that could affect the amounts recorded in the financial statements
	engaging in complex transactions designed to represent the financial condition of the company
	both a and c
	both b and d
	both c and e

Question 14

	a discussion of auditor's involvement in supervising employees with access to cash or other assets susceptible to misappropriation
	a consideration of unusual or unexplained changes in the behavior or lifestyle of employees that have come to the attention of management
	a consideration of the types of circumstances that might indicate the possibility of fraud
	a discussion of how an element of predictability will be built into the nature, timing, and extent of audit procedures
	a discussion of any allegations of fraud that have come to the attention of the auditor
	both a and b
	both c and d
	both c and e

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