C9 CIS

The revenue cycle is a series of activities that begins with receiving a customer order and ends with the payment of cash.

• True

• False

A well-designed revenue cycle cant help to prevent fraud and errors.

• True

• False

Auditors should focus primarily on the financial phase of the revenue cycle, as it involves the most significant risks.

• True

• False

The physical phase of the revenue cycle involves the transfer of goods or services from the seller to the buyer.

• True

• False

A key control in the revenue cycle is the segregation of duties between authorization, recording, and custody functions.

• True

• False

• Analytical procedures are not useful in auditing the revenue cycle.

• The confirmation of accounts receivable is a substantive test of details.

• TrueFalse

• FalseFalse

• FalseTrue

• TrueTrue

• The use of point-of-sale (POS) systems can reduce the risk of errors in the revenue cycle.

• The audit of the revenue cycle should focus solely on the current year's transactions.

• TrueFalse

• FalseFalse

• FalseTrue

• TrueTrue

• The auditor should review the client's sales contracts to assess the risk of revenue recognition issues.

• True

• False

Which of the following is not a key activity in the revenue cycle?

• Sales order processing

• Shipping

• Accounts payable

• Cash receipts

Which document is not prepared by the sales

department?

• packing slip

• shipping notice

• bill of lading

• stock release