cash and accounts receivable

8/19/2019 Cash and Accounts Receivable

1/11

/

br(a TaeA

\t

int

' (

f

15.

a

16.

L7.

-.

r/ta.

19.

20.

?r,

22.

23.

24.

25.

26 .

27.

P150,0001

90,00q

3,000

12,0O0

30,000

6,OO0,OOO,I

(300,000)

1,500,000r1

60,000

60,000

45,000

10,0004

1,OOO,0OO

30,o001

600,0001

900,o00

2,250,OAO

1,500,00O1

225,AOO

67,500

459-ago

7,125,offi

(675,OO0)

450"OOO

500,000

2,475,OOO

1,OOO,OOO

The Reviar

School

of

tTel.

No. 735-9807{

AUDITING

PROBLEIIIS

I RET{EO/

ESPEN LLA

I

IA]II

ES

CASH,AND RECEIVABLES

PROBLEM

1: You

gathered

the following nformation

n relation

to

your

audit of SAP

CORP.

or

the.yearended December31, 2008:

&A*

' /

L Traveler's

check

l/

2. Bank

drafts and money orders

3.

Unused

postage

stamps

4. Employee

check

dated 2009, recorded

as 2008

.

5. I,OU

rom

a key

officer

/

6.

Current

account at

PNB Bank

7.

Cuirent account at EquitableBank

r'

B.

.Curent

account

at BPI

-

fayroll Account

9.

I,eFtricted

oreign

bank

qccount

(in

USD)*x

10.

Credit

memo from

a vendor for

a

purchase

return

^11.

Customer'S

check returned

by the bank marked

DAUD,

return not

{

(

yet recorded in 2008

12.

.Change

und

13.

Bond

sinking

fund

t6 be used to

settle bonds

payable

due 2015

14. Petty

cash

fund

(P12,000

n currency

and expense vouchers

or

18,000)

fireasury

bills, due 3l3Ll09

(purchased

zl3Ll0e)

Treasury

bifls;

due tl3Ll0g

(purchased

L/l/08)

Other rade accounts eceivable

unassigned

Tradeaccounts

eceivable

factored n

20O8,

amount received

from factorlng s

1,200,000, actoringnot recorded

et

in 2OO8

Trade

accounts

n which

post-dated

hecks r"e

eld

(no

entries

were made

on

receipts

of

checks)

Trade r€ceivables

rom

officers drc cr,rmtly

#l*rce

patgn€ftsto

€*lrfuson

F

rdre

or-ebrs,M

Advances o an associated ompany

Credit balances n customers'account

ue

to sales eturn

Interest

receivable

n

investment

n bonds

Interest

payable

on

bonds

Subscriptlons

eceivable

rom ordinary

shares

due in

30 days

-,i-r

Trade note

receivables

2.

1.

**current

exchange

ate as of December

31,

2008 is at P50

or every USDI.

What s

th€

tota

iash and cashequivalent

o be

reported

by the comparry

s of

-DBcember

31, 2008? dw,W

What s the total tradereceivableso be reported s of December 1, 20OB?

3.

How

much

s

the total other receivables

s of December

31, 2008?

PRQBLEI'| 2: You were able

to

gather

the following

from

the December 31, 2008

trial balance

of

RHEA

NC. n connectionwi th

your

audit of the

company:

t

Petty

cash

fund

Cash on hand

Cash n

bank

-

Metrbbank

current

Cash' inbank

-

BDOAcct No. 1

Cash n bank

-

BDOAcct

No. 2

Cash n bank

-

Cocobank

savings

Time

deposits

-

BPI

50,000 w

1,500,00p rTo@

4,000)0004lbo@

iit3r,3ts3 u'w

4,500,000'

2,ooo,00Q


2/11

fuSAr

The Review

School of

Amuntancy

The

petty

cash fund consistedof the iollowing items

as

of Decembei3l, 2008:

Currency and colns

P10,000q

/

Empfoyees'vales

10.t,

uivatdt

8,000.'

Currency

n

an envelope

m6rked

"collections

or

charity"

,

,

with names

attached

6,000

n Unreplenished

petty

cash

vouchers

6,500

Check drawn by RHEA,

payable

o the

petty

cashier.

20,000{

-

'

Unused

Postage

stamps

tt1vrut

alttrraq

.d.\44

"

"5

1'aial

at,ht,(

_LrIQg_

P52,000

Cash on hand represents

undeposited collections

as of December

31,

?008

and

includes

the

follbwing items:

a. Customer's check for P160,000

returned

by

bank

on December

26,20O8 due

to

insufficient und

but subsequently redeposited

and cleared

by the

bank

on January

3,

zoo9.

b. Customer's

check

for

P80,000 dated

January 2,2OgO,

received

on December

29,2008.

c.

A

customer check for P90,000

dated June 1, 2008

received

on the same date

and

yet

to

be deposited since he

same has

been

missing.

d.

Postal

money orders received

from customers,

P100,0O0.

Included among

the

checks

drawn

by

RHEA

against

the Metrobank

current account and

recorded n December2OO8 re the following:

a. Check writteri'on

Dilcember

29,

2OAA dated

January 2, 2OOg,

delivered

to

payee

on

December 29, 2OO8,

P160,000.

b.

Check

written

and dated'December

29,

2008

and

delivered

to

payee

on January 2,

2OO9,

P200,000.

The credit

balance

in

the BDO Current

Account No.

2 represents

checks

drawrt

in

excess of the

deposit

bal4nce.

These

checks werb

stilt

outstanding

at

December

31,

2008.

The

savings account

deposit

in

Coco Bank has

been

set by

the board

of directors

fior

acquisition

of

new

computers. This

account

is expected

to

be disbursed

in

the next 3 months from

the

balance heet

date,

The

time deposit

with

BPI

was

purchased

n lrlorrember

,

1, 2OO9.

DeJerminehe audted balances

f

the

following:

A

r.

Petty

cash

und

2008

and shall rnatureon

Noverfiber

a.

30,000 b.

36,000 c,

10,000

d. 24FAO

0

2.

Petty

cash.shortage/ov€rage

a.

4,000

short b. 5,5OO

hort

c.

2,0Oo

ver d.

500

over

83.

Cash

n

hand

a. 1,070,000

.

b. 1,170,000 c. 1,260,000

d.

1,500,000

,r

9

4.

Cash

n bank

-

Metrobank urrent

-

a. 4,000,000

b. 4,160,000

c. 4,200,000

d.

4,360,000

.i

A

5.

Cash

and cashequivalentso

be

reported n

the 2006

batance

heet

o. 8,560,000. b.

8,566,000

c. 10,560,000

d, 15,060,000

eBAEliEE3i

A

count

of

the

Petty

Cash

Fund having

an

imprest balance

of

P10,000

of Reyes

Corp.

showed

ts

composition

as

follows:

P

2,g0q

Coins ndcurrency... . . . . . . . . . . . . .

'

Paid ouchers:

'

a#r:rnPettY

cash

-eceiPt oucher

zlt '

/

The

petty

cash receipt voucher is for

a return

of travel

expense

advance.

3,000

11000

?44-

c_lgqr

'

500, ' .


3/11

RgSA:

T.he

Review School'of

Aaountancy

e

What

s

he

petty

cash

hortage?

b. 500

'

" .

i

Page3of6

d. 1,000

.O

c. 9004

Ad$usudtttty

h

firilz

.rt@

A

pROBLEM

4:

A count

of

the undeposited

eceipts under

the custody

of U.

Rita, cashier

of Ube

-

C*p-,

""

S-ptember

30,

20OB

showed the

following composition:

.\


4/11

QSA;

The

Review

Sciltool.of

ccountahcy

*

Page 4

of 6

PROBLEIL|: You

obtained

he

following nformation

n the

currentaccount f

BUGOY

ORP.

During

your

examination

f

its financial

tatementsor

the

year

endedDecember 1, 2008.

The

bank

statementon November

0,

2O08

showeda balance

f

P918,000.

Among

he bank

.credits

in November was

customer's

note for P3OO,OOO

ollected for

the account of

the

.company

which he company ecognlzedn

December

mong ts receipts.

Included n

the bank

debitswere costof

checkbooks mounting o

P3,600

and

a P120,000

heckwhichwas

charged

by the bank in irror againstBugoy'saccount. Also n November ou ascertainedhat there

weredeposits

ntransit

amounting

o

P240,0O0

nd out$tanding

hecks

otaling

P510,000.

The

bank

statement or

the

month

of Detember

showed

otal credits

of Pt,248,000and total

chargesof

P612,000',

The

company'sbooks

or

December

howed

otal debits of

P2,2A6,800,

total

credits of

L.,221,600 nd

a

balanceof P1,456,800.

Bank debit

memos for December

were: No. 121

or service

charges,

P4,800and

No. 722

on a custorner's

eturned

check

marked

"Refer

o

Drawer" or

P72,OOO

On December31,

20Q8 he

company

placed

with

the bank

a

cdstomer's

promissory

note with

a

face value of P360,OOO

or collection. The

cgFnany

treated

this

note

as

part

of

its

receipts

although he b5nk

was

able o collecton

the note only

in Janua.ry,

009.

A check fcir P'11,880was recorded n the company cash payments books in December as

P118,800.

1. How mtJch s

the undeposited ollections

s of December

1, 2OOg?

a. 1,018,800 b. 538,800

c7 658,800

d. 418,800

2.

How

much

is

the outstanding checks as

of

December

31,

ZOO8?

a.

575,880

b.

1,192,800

c,

1,085,880

d.

1,089,480

3. How much

is

the adjusted cash

balance

as of N ovember

30,

2OO8?

a.

648,000

b, 768,000

c. 528,000

d.

47L,600

4, l'low

much s the adjusted ashbalance

s of December

1, 2008?

a. t,876,92O

b. 585p3€

c. 66O,OOO d. L,L.26,92O

\

PRODtlttl7: Folfowing he information

pertains

to the

Cash

n Bank

accoUntof

l'tango

Company

or

the

month of

April,2O08;

a..

Bs*ances

er

bank staternent

March

3t, PZt,560,

and

April 30,

p23,040.

b.

Balances

f

Cash n

Bank account

n

Company's

ooks::March

1,

P16,545,and April

30,

P22,680.

c.

Total receipt€

per

books

were F222,190

of which P1.210

was

paid

in cash to a

creditor

on

April 16.

d.

Total

charges

n

the bank statement

during

April

were P2L8,97O.

e. Undeposited

eccipts

were:

March31, P9,06O

nd April

30,

P10,120.

'

f. Outstanding heckswere: March 3li P2$75

and

April

30,

P1,930,

of

which

a check

or

P500

was certified

by

the bank on April22.

g.

NSFchecks eturned,

recorde_g _ag

eductions

of

cash receiptswere:

L1 ReturnedUy e

+O

.2.

Returned

y.Bank

n

April

but

recorded.in

May,P860.

h. Collections y

Bank not

recorded y company

were P12,150

n March,

and

P11,640

n

Apri l .

i.

.

Bankservice harges

not

entered n company's

ookswere: March

3L,

P75O, nd April

30

P420.

J.

A

check

or

P950of Marang

Company

was

charged

o Mango

Company n

error.

k. Acheck drawn or P840was

erroneously ntered n

the.books

s

P480.

Prepare four-column econciliation

f

receipts,

isbursements

nd

bank

balances

or April,

2008, using he form where he bankand book iguresare broughto corrected alances.

Preparehe

ournal

entries o

adjust

h.eCash n Bankaccount

t April

30.

i

,

:-'

'.

l

. :


5/11

RqSA;

The

Revierr

School of AaountaQcy

-

,

i

Page

5 of

6

PROBTEM

8l

The following

T-accotrnt

summarizes.the

ransactionbaifecting the

accounts

receivableof Grandia Company

for

2008.

7Jan.

L balance

after

deducting

creditbaldnce

f P3,000)

,/Charge

ales

Chargeor goodsout on

consignment

Shareholders

ubscriptions

TAccounts

written off

but recovered

€ash

paid

on customer

or

Jan.

1

credit

balance

Deposit

n

contract

Claimagainst

ommon

arrier

or

shipping

damages

IOUs from employees

Cash advance

o affi l iate

Advance o suppl ier

-

Trade

Collections

rom

customers/

(including

verpayment f

P5,000)

Write

offs

Merchandiseeturns

Allowance

o customers

or

shipping amages

Collections

n carrier

claims

Collection n

subscription

nts

P53,000

625,000

5,000

3O,000

1,000

2,500

15,000

x,500

500

10,000

5,000

P620,000r.

3,500(-

2,500L

1,500r

1,000

15,000

1.

Prepareadjusting entries

to correct accounts

receivable.

(, Z. Wh.at

s

the correct

accounts

receivable trade balance?

a. 70,000

b.

61,000

c.

59,500

d.

.55,500

PROBI.EM

:

In

your

audit

of JAMESCOMPANY

or

the

year

2008,

you

concluded

hat

the

allowanc.e

or

doubtful

accounts houldbe

adJustedo equal the estimatedamount

required

basedon

agingof the

accounts

s of December 1. During

youqaudit,you

were

able

o

gather

the'fol lowing

ata: '

l ( * '

Zts"

fr'ndr*\

za(

Allowance

or

doubtful

accounts, an 1, 2OO8

P600,000

Provision

or doubtful accounts

during

(2008

(3a/o

f 10MSales)

30O,OOft

Bad debts

written-off

in 2@8

+;-

375,009

Recovery f baddebtswritten-offduring2O0b 100,bO0

Estimated

oubtful

accounts

er

aging

of accounts n December 1, 2008

400,000

Accounts

eceivable,

ecember '1,

2008 2,375,OOO

I

D

1. Basedon the

result of

your

audit,

what is the

correct

doubtful accosnts

expense

or the

year

20O8?

a.

375,O00

b. 300,000 c.

175,O00

I

75,000

?75

2.

What is

the

correct

net book

value of

the

receivables?

a. 2,375,OOO

b. L,775,OOO

c. 2,000,000

,"

L,975,QOO

PBOQIEII

l9:

From

nceptionof operations o

December

31,

2008, PDA

Corporation

rovided

for uncollectibfe'accountseceivableunder the allowancemethod: prwisions were made

monthly

at 2o/o f credlt sales;

bad

debts wriften off

were

charged o the allowanceaccount;

recoveriesof

bad debts

previously

written off

were

credited o the allowance

aqcounUand

no

year-end

adjustments

o the allocation

ccount

were made.PDA's

sualcredit

erms are

net

30

days,

r allowance

or

doubtful

accountswas

P1]$OO0

at

January

1,

2008.

During

he balance n

the

allowance

or

dou

,2008,

credit salds

otaled.P9,000,000,

Dterim

provisions

or doubtful

accounts

were made at

2o/oof credit

sales;

P90,000

of

.bad

debts were written off, and

recoveries of accounts

.

previously

written

off amounted

o

P15,000.PDA nstalled

a

computer aciltty

n November,

')2008,

and an

agingof

accounts

eceivable

as

prepared

or

the

first time as of

December 1,

2008.

A summary f the

agihg

s as ollows:

co"ilis,g'

',,)&.

:*',-ffiVtn

Classification y

Monthof sale

Nov-Dec

008

Jul-Oct

Jan-June

Prior o LlI/O8

Balancen

Each

Category

P1,140,000

;-.

600,000

400,000

,

ut0.000

Estimatedo/o

Uncollectibl€

L.So/o

1 nn,

'8:0"

"

Q?to'tco

35.0

1* ' '

- -

fun

'

__

PL279,AOA


6/11

RsSA:

he Rwkw

Sdtool of

Aimuntancy

Further

audit

procedures

revealed

that

a P16O,OO0

ustomer

Credit

balance

resulUng

from

overpayment was included n

the "Nov-Dec.

2008'receivables

and that

based

on the

review

of

collectibility

of the account

balances in

the

"prior

to t/LlO9"

aging categorv, additional

receivables

otaling P60,000

were written

off as

of

December

31,

2008.

Effective

with

the

year

ended December

31,

2005,

PDA

adopted

the revised

accounting

standards

n recognizing

bad

debts.

.. 1

, t, . . , . . .

.

Pac6of6

42.

9,

3.

P

J..

what

is

the correct

balance f

the allowance

or

doubtful

accounts

t

year

end?

a. 254,100

b:256,5A0

c. 296,100

What is

the

correct

bad debt

expense

for

the

year?

a. 261,500

b, 201,500

c. 81,500

What is

the

carryihg value

of th e accoun ts receivable

at

year

end?

a. 2,013,500

b.

2,109,500

e 2,113,5OO

PBoq\Eil

lli

The'balance

sheet

of DWARF

CORP,

eported

the fotlowing

ong-term

receivables

s of

December

1, 2OO7:

i

Note

eceivable

rom

sale

of

plant

Note receivable

rom

officer

ey,ggAoril 1.

The nitial

pllcrpg_|gnd

interest(FEyllE\was

made_

n

April 1,

2008.

-Nur{il{Aev

_Adi-fq[r/i---T1c

.

rriq:ZnT---

----:*---.-..._._.;=

:

dt*\^J

.[r{

ltr*t'

i,lc

.

rf frrg

{:.,

-""..-'..._*-;='-,:

,

b. The note receivable

from

officer is

dated

December

3 ,

2OO7 earns

interest

at

.l_o"oZj

er

annum,. and

is due

on

December

31, zd}||.

The

2O08

interest

.was

received

qr

d. 298,500

d.

76,500

d. 2,370,0O0

d.

505,500

d. 756,000

P4,500,000

1,200,000

In connection

tth

your

audit,

you

were

abie o

gather

he following

ransactions

uring

2OOg

and

other

nformation

ertaining

o

the company'song-term

eceivables:

'

a.

The note

receivable

orm

sale

of

ptant

bears

nterest

at L2o/o

er

annum.

Th-enote

is

payable

n

3 annual nstallments

f P1,500,000

interest

on the

unpaid balanCe

becember

31, 2008.

-w:

c,"rr^t

* blofdt${0V

-

1,\.64{Alr.fhJ . ,- -


7/11

RsSA: The Review

School

of

Accountancy

..

:,,.:,

,

FaOa 7

cf,f

9

_

't

a

1.

Which

of the

following cash

fraud activities involves the

postBonement

of, he

recording of

receipts

and can

be

well

perpetiated

wfiere there is.

ack

of segregation of duties between recordkeeping and custodial

,

funct ions?

3: IitJls,g

*r

c. Windowdressing

d. .Salami

raud

2. An auditor

susfects that

a client's

cashier

s misappropriating ash receipts or

personal

use

by

lapplng

customerchecks eceived n the mail. In attempting o uncover his embezzlement cheme, he auditor

most

likely would compare he:

:

a.

Dates uncollectible ccounts

are authorized

o be written off with the dates he

write-offs are

actually

ecorded.

b.

Individual ank

deposits t ips

with the detailsof the m


8/11

RgSA:

The ReyiewSchoof,of

Accountancy

lrrp*

or

e

11.

Which

of the following h aracteristics

ostlikdly

wouldbe indicative

f check

kit ing?

a, High

urnover

of

employees

ho have

access o

cash.

b.

Many

arge

checks

hat

are recorded n.Mondays.

c.

Frequent TM

checking

ccount

withdrawals.

-

d. Low

average

balancd ompared

o high evel

deposits.

x)

12.

Which of the followingaudit

procedures'will

ikely detect or

uncover

kiting

activitiesof

the

client?

i

a.

Sending

onfirmationo banks.

b.

Vouch

check

ssuanies epresenting isbursementso

source

ocuments.

c. Render ashcounton a surprise asis.

d.

Simulteineously

alldate

bank

reconciliations

btements.

(x)

13. The usefulneqs f the standard

bank tonfirmation

requestmay

be

timited because

he

bank ernployeewho

completes he

form

may:

a.

Not believe

hat

the bank

s obligated

o

verify

confldential nformatiofr

o

a third

Barity.

b. Sign

ah retwn the form

without inspecting

he accuracy

of

the client 's bank reconciliation.

,

c.

.

Not

have

accesg o'the c lient's

cutolT

bank

statement.

,.

d. Be unawareof

afl the fihancial

elationships

hat

the bank'has

with the

client.

(x)

14. In

validating

bank

reconciliation

tatements

of

the client, the-auditor

should race back outstandingchecks

to the:

'

a.

Accounts

payable

voucher.

b. iancelled-checks

eturned

by

the bank.

.c.

Bank statementof the current

month.

d, Cut-offbank

statement

f

the subsequent

month.

(1)

15. In

validating he

bank

r€conciliation tatements

of the client,

the auditor should

race

back the unrecorded

debits,

ike

servicecharges

o

th€l:'

a. Accounts

payable

voucher.

b, Cancelled hecks

eturned

by the bank.

.

c.

Bank

statement f

the curent

month.

x)

d.

Cut-off

bank

statementof the subsequentmonth.

16, The

proof

of cash statements

s

usually

prepared

by t he auditor when:

a.

-

Internat

control

over.cash

s

strohg and control risk is

placed

at the

maximum.

b. lnterhal control over cash

s

weak and control risk

is

place

at the

maxlmum.

(x)

c.

Cashbalance

s very

signif icant.

d.

Cash

balance

s

very

insignificant.

.

17.

Which of

the following

proctdurcs

concerning

accounts rccelvable would

an

auditor niost'likely

perform

to

.obtain

evidential

mattdr in supportof an assessed

evel

of control risk

below he

maximum

evel?

i?.

Obsirving

an

entlty's

empbyec

prepale tfie

scheduleof

past

due

accounts

eceivable. x)

b.

Sending

conflrmation equests o ari entity's

prlncipal

customers o

verify

the

exisfenceof accounts

receivable.

c. Inspectingan entify's

analysisof

accounts

eceivable

or

unusualbalances.

d.

Comp;;i;n

"ni'tyi

,ni6lrectiUre

accounts

payable

to

actual

uncollecti.pJe

ccounts receivable.

18.

Which

of the

following

procedures

most

tikely

would n


9/11

RsSA: The Review School

of Accountancy

Paqe

9 of

9

' , .

ft

?;

r ''

sales

ournal.

x)

c. Compare he

invoiced

prices

on

prenumbered

ales

nvoices

o the entity's authorized

price'list.

d. Inquireabout he entityr5

redit

grantingpolicies

nd-the onsistent pp,licationf ciedit checks.

23. An auditor's

purpose

n reviewingcredit

ratings

of customerswith delinquentaccounts

eceivablemost

likely

s to

obtainevidence oncerning

management's ssertions

bout

a.

Valuation r alJocation.

x)-

b.

Presentation

nd disclosure.

c.

Existence r occurrence

d.

Rightsand obligations.

24.

' loachievegood

nternal ontrol,

whic.h epartment hould

perform

he activit ies f matching hipping

documents

with salesordersand

preparing

aitysales ummaries?

a. Bl l l ing

x)

b. Shipping

c. Credit

d. Safes roer

25.

Whichof

the

following

would

he auditorconsidero

be an incompatible

peration

or a cashier

f

th e

cashier

eceives emittances rom

the

mailroom?

a.

Posting

he

receipts

o

tlle accounts

eceivable

ubsidiary edger cards.

(x)

b.

Making he daily deppsitat the

local

bank.

c. Preparing he

daily deposit.

d. Endorsing

he

checks.

26. The most ikely

esultof

ineffectiventernal

ontrols

n the sales

ycle

s

that

a. Fiititiou. transactions

could

be recorded,

causing an understatement of

revenues

and

an

overstatement

of

receivables.

b. tregularities

in recdrding ransactions n the

subsidiaryaccountscould

delay

the

shipmentof

goods.

c.

Omissionof shippingdocuments

could

go

undetected, ausing

an understatenlent

f

inventory.

d.

Final

authorization

of

credit

memos by

personnel

n

the sales department could

permit

an employee

defalcation

cheme.

x)

27.

fsr

effective

nternal control, employees

maintaining

he

accounts eceivable

ubsidiary

edger

should

not

alsoapprove

.

a,

Employee vertime

wages,

b.

Credit

granted

to

cuitomers.

.

c.

Write-offsof

custorneraccounts.

x)

d.

eash

disbursements.

28.

During

an audit of the

accounts eceivabl€

unction,

you

found

that the

accounts

eceivable urnover rate

had fallen rom 7.3 to 4.3 over the last three

y'ears.

What is the mos t likely causeof the decrease?

a.

An

increase n

th€

discountoffered

or

early

payment

b,

A more

liberal

credit

policy

x)

c.

A change orm

net

30

net 25

d. Greatercash Sales

29. Shipping

documents

should

be

traces

o and compared

with

sales

ecords

or

invoices

6

.

a,

Determine

whether

payments

are

properly

applied

o customeraccounts.

l

b.

Ensure

hilt shipments

are billed o customers.

x)

c. Determine

whether unit

prices

billed

are in accordancewith

sales

contrads.

d.

Ascertain

whether

afl sales

are supportedby shippingdocuments.

30. An auditor

noted

hat

the

accountC

eceivable epartment

s

separate rom

other

accaunting

activities.

Credit

s

approved

by a s€paratecredit

department.Controlaccounts

and

subsidiary

edgers

are

balanced

monthly:

Similarly,

accounts

are

aged monthly.

The

accounts

eceivable

manager

writes

off

delinquent

accountsafter

one

year

or

sooner,

f a bankrupt€yor other unusualcircumstances involved.Credit

rnemoranda re

prenumbered

and

must

correlate

wlth

receiving

eiDorts.Whichof the

following

areas

could

be viewed as

an

internal control

weakness

f

the

above

organization?

a.

Write-cjffs f

delinguent

accounts

x)

b. Creditapprovals

c.

Monthlyaging

of

receivables

d.

Handling

f credit

memos

Sendingaccounts

eceivable onfirmation

etters ij the client'scustomers s consistent

with the auditor's

objective f

validating lient's

eceivable ssertion n:

a.

ExisteFce nd

rights

x)

b: Completeness

nd

valu€ition

c.

Completeness

nd rights

')

d.

Existence nd

valuation

Theauditors'analysis f the clientsagedaccounts eceivable chedules consistent ith the auditor's

objective

of

validating

client's

eceivable

ssertion

on:

a. Existence

b. Completeness

c.

Rights nd obligation

d.

Valuation

x)

31.

32.

/5 .\


10/11

fie-q

eAt(

'

-

. . *

W( W?h.. fuRt_aa$s

"y

_

k

d

lts@

lx4e@.

Qlzeeo

Wlqb

'

"""

Dr,r

tM

Quw)

rsrwvJ

, \

l- .

wk.

(sroorDr

sk@

(ggry)

\iotsxo\

,-

---a ,

t

''

-

Wr @m Lttwl , ,

,tf

,ttu

(uw)

w?o

ffi

Q06

@

tleTw

tl?kqu

bF

hfrit

hlntb

&

W

tlltbt

0

Lfu+e@

,r@

(wn)

fu-")

fu'nP)

lUQn

f}'ft8Q

let n\

'

fqw)

' H2;;;)

,.

(*m1

(wvqz"o)

loug'u

..t

nr

ql

ilra

tlga

(om)

2nw

Cq*o)

lDl'.o

&&)

ffit'

ul,lolo

(trv)

Low

Lr*n7

/v/ap

2lago

tet

o

(t+nS

w

'{5e

A.A)

d(

&+

n"

tct6D

(+*)

1aw)

lq4o

trtD

&n\

vww

G^)

(,+t

)

(w)

qlD

?@

bqqa


11/11

l"UqWi"a

p@

Rca;1*

e"xhca

W

cash and accounts receivable

Documents