1. Which of the following procedures would an auditor most likely perform for year-end accounts receivable confirmations when the auditor did not receive replies to second requests?
(a) Inspect the shipping records documenting the merchandise sold to the debtors.
(b) Review the cash receipts journal for the month prior to the year-end.
(c) Intensify the study of the internal control structure concerning the revenue cycle.
(d) Increase the assessed level of detection risk for the existence assertion.
(e) Trace the cash disbursements journal for the month prior to the year-end.
2. Tracing shipping documents to prenumbered sales invoices provides evidence that:
(a) shipments to customers were properly invoiced.
(b) no duplicate shipments or billings occurred.
(c) all goods ordered by customers were accounted for.
(d) all prenumbered sales invoices were accounted for.
(e) shipments to customers were properly vouched.
3. Cash receipts from sales on account have been misappropriated. Which of the following acts would conceal this defalcation and be least likely to be detected by an auditor?
(a) Understating the sales journal.
(b) Overstating the accounts receivable control account.
(c) Overstating the accounts receivable subsidiary ledger.
(d) Understating the cash receipts journal.
(e) Overstating the sales journal.
4. Which of the following internal control activities most likely would deter lapping of collections from customers?
(a) Independent internal verification of dates of entry in the cash receipts journal with dates of daily cash summaries.
(b) Separation of duties between receiving cash and posting the accounts receivable ledger.
(c) Authorization of write-offs of uncollectible accounts by a supervisor independent of credit approval.
(d) Supervisory comparison of the daily cash summary with the sum of the cash receipts journal entries.
(e) Segregation of duties between cash payments and recording checks.