AFS_Advance Audit_Lec 3_Sale

Which of the following is not an account affected by the sales and collection cycle?

• Cash

• Accounts receivable

• Allowance for doubtful accounts

• Sales of Accounts Receivables

The overall objective in the audit of the sales and collection cycle is to evaluate whether the account

balances affected by the cycle are fairly presented in accordance with Accounting standards.

• True

• False

What is the primary purpose of assessing the internal controls within the sales and collection cycle?

• To ensure compliance with tax regulations

• To prevent fraud and errors

• To increase sales revenue

• To enhance customer satisfaction

Which of the following accounts is typically increased when a sale is made on credit?

• Cash

• Accounts payable

• Accounts receivable

• Inventory

During the audit of the sales and collection cycle, which document is crucial for verifying sales transactions?

• Purchase order

• Sales invoice

• Bank statement

• Shipping document

Which of the following is not one of the five classes of transactions included in the sales and collection

cycle?

• Sales returns and allowances

• Write-off of uncollectible accounts

• Bad debt expense

• Interest Income

What event initiates a transaction in the sales and collection cycle

• receipt of cash

• delivery of product to a customer

• identification of a new customer

• customer request for goods

A ________ is a document that indicates a request for merchandise by a customer

• sales invoice

• vendor invoice

• customer order

• sales order

A ________ is a document that is matched with the customer order to assure that the correct quantity

and type of goods are shipped.

• sales order

• customer order

• vendor invoice

• sales invoice

What critical event must take place before goods can be shipped in order to assure payment can be

reasonably expected?

• determination of correct delivery address

• credit approval

• matching of shipping document with sales invoice

• receipt of sales order from the customer