SOLVED

Learning Objective 14-1 1) Which of the following is not an account affected by the sales and collection cycle? A) Cash B) Accounts receivable C) Allowance for doubtful accounts D) Sales of Accounts Receivables 2) The auditor’s objectives for the sales and cash collections activities when the client is primarily an e-commerce business as compared to a “bricks and mortar” business are: A) unchanged. B) expanded. C) mitigated. D) decreased. 3) 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. A) True B) False 4) The sales and collection cycle applies to businesses that transfer goods to customers or provides services to businesses. A) True B) False Learning Objective 14-2 1) Which of the following is not one of the five classes of transactions included in the sales and collection cycle? A) Sales returns and allowances B) Write-off of uncollectible accounts C) Bad debt expense D) Interest Income 2) What event initiates a transaction in the sales and collection cycle? A) receipt of cash B) delivery of product to a customer C) identification of a new customer D) customer request for goods 3) A ________ is a document that indicates a request for merchandise by a customer. A) sales invoice B) vendor invoice C) customer order D) sales order 4) A ________ is a document that is matched with the customer order to assure that the correct quantity and type of goods are shipped. A) sales order B) customer order C) vendor invoice D) sales invoice 5) What critical event must take place before goods can be shipped in order to assure payment can be reasonably expected? A) determination of correct delivery address B) credit approval C) matching of shipping document with sales invoice D) receipt of sales order from the customer 6) Before goods are shipped on account, a properly authorized person must: A) prepare the sales invoice. B) approve the journal entry. C) approve the customer’s credit. D) verify that the unit price is accurate. 1