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3 broad categories of activities in revenue cycle
sales transactions, sales adjustments, cash collecitionns
Typical control procedures in revenue cycle
proper authorization, segregation of duties, prenumbered documents, restict access to cash, independent checks on performaance.
3 general steps that an auditior can take to reduce material misstatment
assess risk of material mistatement, select appropriate audit techniques and design substantive procedures
examining bank transfer is a means of testin for
an imprest account has a _____ balance.
MY journal entry if bank gives me $5 dollars interest
debt Cash
credit    interest revenue
Banks journal entry if bank gives me $5 dollars interest
debt Interest expense
credit    deposit payable
MY journal entry if I bounce a $20 check
debt svc charge
credit    cash
Banks journal entry if I bounce a $20 check
debt depost payable
credit    fee income
bank debiting my account is a good or bad thing
bad thing
The cash account is involved in which cycle?

Revenue and collection.
Acquisition and expenditure
production and conversion.
Which of the following is an appropriate audit program step for the review of canceled checks for authorized signatures?
--Compare the check date with the first cancellation date.
--Determine that all checks are to be signed by individual authorized by the board.
--Examine a representative sample of signed checks and determine that the signatures are authorized in the corporate signature book.
--Examine a representative sample of signed checks and determine that the signatures are authorized in the corporate signature book.
A proof of cash is normally used
to test the transactions process when controls over cash are weak

When counting cash on hand the auditor must exercise control over all cash and other negotiable assets to preven
Substitution of stolen funds
When a fraud perpetrator embezzles company funds for the purpose of buying presents for co-workers, the fraudster's motive is said to be:
An enlightened management can decrease the probability of fraud in the company best by
Establishing work teams that share responsibilities, performance, and bonuses based on collective efforts
independence of mind
the state of mind that permits the performance of an attest service without being affected by influences.
Independence in apperance
avoidance of circumstances that would cause a reasonable and informed third party thay your opinion may have been compromised
vouching tests for
existance and overstatement
tracing tests for
umderstatement and completeness
obtaining and evaluating the aging schedule is an audit test for which account
accounts recievable
what is a positive confirmation
response is needed no matter the result
what is a negative confirmation
response only needed if there is a problem.
what adds reliability to the confirmation?
auditors start to finish, time of confirmation.. year end is stronger, confirmation has a self addressed envelope and stamp
confirmations are generally signed by the ____
control of the confirmations must be maintained by ________
the auditor
What do auditors do if first response for confirmation doesnt arrive?
send a second request
To be recognized, revenues must be
realized, realizable, earned
Recording a sale while keeping the goods in your own warehouse is called
bill and hold
Custody is transferred from the warehouse to the shipping department upon authorization of the
Shipping order
A form signed by the carrier to verify goods are shipped is called the
Bill of lading.
A fraud technique whereby someone takes a cash receipt and uses a later cash receipt from another customer to cover the first one is called
Approval of credit sales by the credit department supports the assertion of
Valuation or allocation.
Confirming accounts receivable primarily supports the assertion of
The most reliable evidence comes from
A blank confirmation.
major categories of the expenditure cycle are
pruchase transactions, cash payment transactions
most common tests for accounts payable are
foot and vouch, confirmation, and cut off testing
Why is the completeness assertion consdiered by most auditors to be more critical to accounts payable than the other assertions
managment maybe motivated to underestimate liabilites.
most common tests  for purchases are
scanning purchae journal, couching cash disbursments, tracing from recieiving reports, inquiries of mgmt
2 reasons why confirmations do not need to be sent for accounts recievable
ineffective AND can perform alternative measures , not material
if you lack independence what is the only opinon you can give? 
2 reasons why a postive confirmations are stronger
alternative procedures,
negative confirmations that have no response do not mean that reciepent agrees.
list five alternative procedures
second request, subsequent cash recepts, examine invoices, shipping documents, purchase orders, bills of lading
3 things necassary to send out a negative confirmation.
rmm is low, large number of small balances, customers of client want confirmations done properly
segregating duties with cash.. what does arc stand for
segregation of authoization, records and custody
confirmations are generally signed by 
the client
control of the confirmations should be maintained by 
the auditors
most common tests for a/p are
foot and vouch a/p listing
confirm a/p
cut off testing
major functions  of conversion cycle are
issuance of raw materials to production, production of goods and storage of fg.
what is the most important account in the conversion cycle?
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