AIS A/D test two

Which of the following is the correct order for document preparation and entry recording in the sales and cash receipts cycle?

customer order, bill of lading, sales invoice, entry in sales journal, entry in accounts receivable subsidiary ledger

What is typically the first step performed after checks are received by a company?

a cash receipts prelist is prepared

In order to maintain controls over cash receipts, cash is typically deposited _____, while a bank reconciliation is performed _____.

daily, monthly

In order to maintain controls over cash receipts for a company, the cash receipts journal would be initialed after which of the following events?

the validated deposit slip and cash prelist are agreed to the cash receipts journal for each entry.

What document does a customer receive when goods are returned?

credit memo

What are the names of the three documents matched before a check is issued to a vendor for payment on account?

receiving report, approved purchase order and vendor invoice

In the cash disbursements cycle, the vendor invoice is marked paid when a check or ACH payment is issued in order to:

avoid duplicate payment of the invoice.

The general journal is used to:

post all accounting entries not posted in other individual journals.

The sales journal is the only journal that would be used to post a:

credit sale

The purchases journal is used to record:

all vendor purchases on account

As the manager of a company, you are concerned that not all customer orders are being shipped.  To test whether all orders for the year have been shipped, you would:

review all customer orders and make sure that each has a related bill of lading.

An auditor is interested in testing whether a sample of recorded credit sales were actually ordered by customers, shipped to them and billed properly.  In this case, the auditor would most likely select a sample from which source?

the sales journal

An auditor is interested in testing to see whether all items purchased over $500 were properly capitalized.  In this case, the auditor would most likely select a sample from which source?

the purchases journal

An arrow with a dotted line ( ------>) in a systems flowchart indicates which of the following?

information flow only, no document flow

A document shown in a systems flowchart:

can come from a source outside the company & can be prepared by the department being described in the flowchart

Interpret the following credit terms: 2/10, Net 30.

a 2 percent discount can be taken if the balance is paid within 10 days; otherwise, the balance is due in 30 days.

Which of the following statements is true?

Original entries are recorded in journals, and journal totals are posted to ledgers.

In a cash receipts system, which of the following controls will best ensure that all customer receipts received are properly recorded?

Mailing monthly statements to customers

Which of the following is an effective control to ensure that sales returns are valid?

Require a receiving report to be attached to all credit memos prior to approving the return.

For which of the following forms is an in-house authorization separate from the preparer most important?

Credit memo

A completed credit sales transaction should typically be supported by

a customer order, bill of lading, and sales invoice.

For which of the following forms is an in-house authorization separate from the preparer least important for a company?

Remittance advice

Which of the following control procedures would most likely help assure that goods shipped are billed?

Examining shipping documents for matching copies of sales invoices.

The primary difference between cash receipts prelists and remittance advices is that

prelists summarize the information contained on each remittance advice.

Which of the following control procedures is best for ensuring that sales are recorded in the proper accounting period?

Have an employee from the accounting department present in the shipping department at the close-of-business for the current year in order to record the last shipping document number of the year.

Which of the following entries are correct for writing off an account receivable as uncollectible?

Decrease allowance for doubtful accounts; Decrease accounts receivable

What does it mean to “cancel” a vendor’s invoice?

Stamping “paid” (manually or electronically) on a vendor invoice when making a payment to prevent an invoice from being paid more than once.

Which of the following statements least justifies the need for receiving reports?

They provide assurance to the vendor that all goods were received in good condition.

Which inventory method is most effective for companies that use just-in-time accounting systems?

Perpetual

For the most effective and efficient control environment, payments for supplies purchases should be signed by

the treasurer of the company.

When estimating uncollectible accounts, which of the following would be least useful?

Sales forecasts

Which of the following sequence of steps in the accounting process is correct?

Prepare records, record in journals, post to ledgers, and prepare unadjusted trial balance