Audit Final Exam Practice Questions with
100% Correct Answers 2022/2023
What was the motivation of the CEO to engage in the fraud in the Regina Vacuum
Cleaner movie? - Ans-His sister was successful in business and he
...
Audit Final Exam Practice Questions with
100% Correct Answers 2022/2023
What was the motivation of the CEO to engage in the fraud in the Regina Vacuum
Cleaner movie? - Ans-His sister was successful in business and he wanted to be a
success too, he felt forced to do it
What were some accounts or activities that were misstated in the movie Regina
Vacuum Cleaner? - Ans-Premature revenue recognition, failure to post certain
expenses, accounts receivable and sales revenue
A sale of $60,000 was made to a real customer. Then, the sale was mistakenly
recorded again. Indicate the balance-related audit objective that is a problem - AnsExistence
A customer check in the amount of $80,000 was received and was not recorded. The
customer's accounts receivable balance was not decreased. Indicate the balancerelated audit objective that is a problem for cash _____________, accounts receivable
_____________ - Ans-completeness, rights and obligations
A sales return of $90,000 was not recorded. Indicate the balance-related audit objective
that is a problem - Ans-Completeness
The monthly adjustment to Bad Debt Expense and Allowance for Uncollectible Accounts
was made. The controller just made up a number to use in the journal entry. Indicate the
balance-related audit objective that is a problem - Ans-Valuation and Allocation
A shipment was made to a real customer. The customer was not billed and the sale was
not recorded. The sale would have been in the amount of $105,000. Indicate the
balance-related audit objective that is a problem - Ans-Completeness
An accounts receivable was sold, but is still included in accounts receivable. Indicate
the balance-related audit objective that is a problem - Ans-Existence
This document is also called bill of lading - Ans-Shipping Document
This document is basically the bill sent to the customer for a purchase it has made -
Ans-Sales Invoice
This document may be used when a customised, special or expensive product is made
by the client for the customer - Ans-Sales Contract
This document shows the beginning balance, purchases on credit, payments and
ending balance for a customer - Ans-Monthly Statement
This document shows the type of product and the quantity the customer wants to
purchase - Ans-Customer Sales order
This document is returned with the customer check in payment of accounts receivable -
Ans-Remittance Advice
The accounting document that shows all the activity in sales revenue for a year - AnsSales Journal
The result is a decrease in accounts receivable and an increase in sales returns and
allowances - Ans-Credit Memo
How could lapping be detected? - Ans-Too much activity on credit sale, and compare
amount on remittance advice
What conditions at the company could allow lapping to happen? - Ans-Weak separation
of duties, custody and accounting have been combined, and independent checks on
performance are not supervised
Analysis of responses for A/R Confirmations; year-end is December 31, 2015: We paid
the balance, $50,000, on January 3, 2016 - Ans-Timing difference, sales issue, shipping
documents, subsequent cash receipts
Analysis of responses for A/R Confirmations; year-end is December 31, 2015: We
already paid off this balance of $40,000 - Ans-Timing difference, subsequent cash
receipts, sales invoice, shipping documents
Analysis of responses for A/R Confirmations; year-end is December 31, 2015: We did
buy products, but we are contesting the prices of two items. ABC says we owe
$100,000 for these items, but we think the value of the products is $80,000 - AnsException, sales invoices, shipping documents, sales contract, emails or calls on file
Analysis of responses for A/R Confirmations; year-end is December 31, 2015: I'm glad
you wrote; we can use some help here. We still have not received these goods. We did
place an order, around December 1, 2015, which will cost us $85,000, but we have not
yet received this order. Can you check on this order for us? Please give a call to our
purchasing manager with update. - Ans-Timing difference, compare $85,000 for
customer, shipping document, figure when product shipped, see what client has
recorded
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