An Audit Procedure That Compares the Name, Amount, and Dates

question 46

Multiple Choice

An audit procedure that compares the name, amount, and dates shown on remittance advices, either paper of electronic via direct deposit, with cash receipts journal entries and with related duplicate deposit slips would be effective in detecting:

• A)kiting.
• B)lapping.
• C)illicit write-offs of customers as uncollectible accounts.
• D)sales without proper credit authorization.

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Definitions:

Finished Goods

Products that have completed the manufacturing process and are ready for sale.

Cost of Goods Sold

The immediate expenses linked to the creation of products that a company sells.

Accounts Payable

Liabilities owed by a business to creditors for goods and services purchased on credit.

Work in Process

Inventory that includes the cost of raw materials, labor, and manufacturing overhead for products that are in various stages of production but not yet complete.