The revenue cycle includes activities related to _ all the way through _.
1.) sales2.) collections
The timing of revenue recognition is an _ _.
inherent risk
The auditor must understand _ no matter what type of audit he/she is performing
controls
Auditors give _ _ on the financial statements they are auditing
reasonable assurance
The audit report must be in _
writing
A division of _ is when the auditors mention other auditors in their report
responsibility
Explanatory paragraphs in unqualified audit reports reference the notes to the _ _
financial statements
Substantial _ is explanatory language that can be used in the unqualified report
doubt
The term _ _ is used to qualify a report
except for
the revenue cycle transaction includes receiving a customers purchase _, check inventory _ status, generate _ order, obtain _ approval, prepare _ and packing documents, ship and _ shipment of goods, prepare and send the _, send monthly _ to customers and receive _
1.) order.2.) stock3.) back.4.) credit.5.) shipping.6.) verify7.) invoice8.) statements9.) payments
A control objective of the revenue cycle to assure transactions are recorded accurately would be making sure recorded sales agree to the _ _
invoice price
a formal legal document that conveys responsibility to the shipper
bill of lading
The bill of lading is the evidence that the transfer of goods took place to the _
customer
Turnover ratios are part of _ _
ratio analysis
the primary inherent risk associated with receivables is that the _ _ is not valid because the receivables recorded do not exist or they are not _ from the customer
1.) net amount2.) collectible
an inherent risk would be that the receivables are pledged as _ against specific loans with restricted use ( disclosures of such restrictions are required)
collateral
Inherent risk: receivables are incorrectly classified as _ when the liklihood of collection next year is low
current
Inherent risk : collection of a receivable is contingent on specific events that cannot currently be _
estimated
Inherent risk: _ is not required until the purchaser sells its product to its end customer
payment
Inherent risk: A/R are _ incorrectly, and potentially uncollectable amounts are not recognized
aged
Inherent risk: orders are accepted from customer with poor credit, but the _ for _ _ is not increased accordingly
allowance for doubtful accounts
When an auditor considers and compares their own calculation of AFDA to that of managements, they are trying to substantiate the _ _ _
valuation of receivables
what does AFDA stand for?
Allowance for doubtful accounts
The A/R aging is used by the auditors to assess the adequacy of the _
AFDA
The difference in positive and negative confirmations is the customers _ of response
mode
Division of responsibility is described in the _ _
introductory paragraph
The _ paragraph in the unqualified opinion gives information related to the audit planning and procedures
scope
An unqualified opinion with an _ paragraph would be used by the auditor to draw attention to a large related party transaction
explanatory
A scope limitation would not result in an unqualified opinion if _ _ _ _ is the opening sentence in the opinion paragraph of an adverse opinion
does not fairly present
A scope limitation would not result in an unqualified opinion if there is a _ _ _ overshadowing the overall financial statements, the auditor would give an adverse opinion
material dollar misstatement
A scope limitation would not result in an unqualified opinion when the auditor is not _ with respect to the client he/she may not accept the engagement
independent
A scope limitation would not result in an unqualified opinion ifa justified departure from _ would result in an unqualified opinion with an explanatory paragraph
GAAP