Question

6. Adjusting journal entries are prepared for which of the following? a. record depreciation expense b. adjust payroll expense for wages earned but not yet paid C. record an inventory purchase d. a and b only e. all of the above 7. An auditor is interested in testing whether a sample of sales to customers in the current year have been recorded. In this case, the auditor would most likely select a sample from which source? a. customer orders b. sales invoices c. entries in sales journal d. entries in the cash disbursements journal e. the accounts receivable subsidiary ledger Interpret the following credit terms: 2/10. Net 30. a. a 10 percent discount can be taken if the balance is paid within 2 days, otherwise, the balance is due in 30 days. b. a 2 percent discount can be taken if the balance is paid within 10 days; otherwise, the balance is due in 30 days. C. 20 percent of the balance is due in 30 days. d. 20 percent of the balance is due upon receipt, with the remaining balance due in 30 days. e. a 20 percent discount can be taken if the balance is paid with 30 days. 9. The primary difference between prelists and remittance advices is that a. there is no difference. b. prelists generally contain preprinted information regarding sales to customers. c. remittance advices are less likely to contain errors because they are prepared by the individual who opens the cash receipts. d. prelists summarize the information contained on each remittance advice. e. remittance advices are less effective as a control procedure. 10. Which of the following statements least justifies the need for receiving reports? a. They reduce the risk that goods will be purchased on behalf of the Company for personal use by employees. b. They help prevent paying for goods before they have been examined as satisfactory by the Company. C. They create an audit trail that bridges the purchasing and cash disbursements cycles. d. They help to ensure that only authorized goods are received by the Company. e. They provide assurance to the vendor that all goods were received in good

Answer 1

6.) Option Is D adjusting journal entries are prepared only for recording depreciation expenses and adjust of payroll expenses for wages earned but not yet paid . Therefore the option is D i.e., A and B only.

7.) Option is B    an auditor interested in testing the sales to customer in the current year have been recorded from Sales invoices gives the auditor a sample for testing.

8.) Option is B the interpretation is as follows a 2 percent discount can be taken if the balance is paid with in 10 days ; otherwise the balance is due in 30 days.

9.) Option is B the primary difference between the prelists and remittance advices is that prelists generally contain preprinted information regarding sales to customers.

10.) Option is E The least justifies the need for receiving reports will be they provide assurance to the vendor that all goods were received in good condition.