[jeff]

Welcome to the Q2 2015 CPA Exam Study Group for AUD.

World Premier: “Unmodified” (Audit Reports Rap Video) 🙂

Posted by Another71 on Thursday, November 13, 2014

Free NINJA: https://www.another71.com/cpa-exam-study-plan/

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[Anonymous]

An auditor discovered that a client's accounts receivable turnover is substantially lower for the current year than for the prior year. This may indicate that:

a.

An employee has been lapping receivables in both years.

b.

Employees have stolen inventory just before the year-end.

c.

The client recently tightened its credit-granting policies.

d.

Fictitious credit sales have been recorded during the year.

[Anonymous]

@DPD516 – D?

[AJG38]

C?

AUD - 91 (4/7/2015)
BEC - 88 (4/29/2015)
FAR - 80 (5/29/2015)
REG - 70 (8/18/2015); 82 (11/08/2015)

Gleim & Ninja Flashcards

[Martin]

D

Explanation:

A/R turnover is the number of times that the A/R balance is collected during the year. Fictitious sales increase A/R, but leave collections the same, so A/R turnover decreases. A/R turnover would be unaffected by current inventory levels. Tightening credit-granting policies would tend to increase A/R turnover. Lapping receivables in two years would result in both years’ receivables being misstated, but unless the volume of lapped amounts changed, turnover would not be affected.

My question is does the Fictitious credit sales increase credit sales(Numerator) as well?

Through God all things can happen!

“You never fail until you stop trying.”
― Albert Einstein
When I was young, I used to admire intelligent people;as I grow older, I admire kind people.
“Just keep swimming, just keep swimming.”

FAR= 72-84
Audit= 73-82
BEC= 74-75
Reg=77

[trish_1234]

d

AUD 69, 92 7/15 Gleim and Ninja test bank
FAR sometime in 10/15 Gleim
BEC not taken
REG not taken

[AJG38]

Martin, you are correct, and yes it does increase both numerator and denominator.

AR Turnover = Net Sales/Avg. AR

$10,000 in fake credit sales = Dr. AR 10,000

CR. Revenue 10,000

So the total effect is 1:1, as long as AR turnover is > 1, the 1:1 will decrease ratio.

If, sales = 50,000 and ar = 10,000 Ratio = 5.0

Fake sales of 10,000 new sales = 60,000 and ar = 20,000 Ratio = 3.0

AUD - 91 (4/7/2015)
BEC - 88 (4/29/2015)
FAR - 80 (5/29/2015)
REG - 70 (8/18/2015); 82 (11/08/2015)

Gleim & Ninja Flashcards

[Anonymous]

Yes the answer is D, thanks Martin. And I believe the fictitious recordings would have to affect the Sales Revenue figure as well because they would have to somehow balance the journal entry – even if it is fake. I think the reason the turnover is lower than the previous year is because the previous year's ratio would not have had those uncollectible additional A/R balances in the denominator. This was a tricky one for me to think through. I think it's best answered through elimination of the others. A is out because the lapping occurred in both years; thus, no change would occur in the ratio. B is out because inventory has nothing to do with the ratio. Tightening credit granting policies would increase the ratio because you are not accepting as many non-creditworthy customers whose A/R you may never collect.

[trish_1234]

In performing a search for unrecorded retirements of fixed assets, an auditor most likely would

A. Tour the client’s facilities, and then analyze the repair and maintenance account

B. Inspect the property ledger and the insurance and tax records, and then tour the client’s facilities.

C. Analyze the repair and maintenance account, and then tour the client’s facilities.

D. Tour the client’s facilities, and then inspect the property ledger and the insurance and tax records.

AUD 69, 92 7/15 Gleim and Ninja test bank
FAR sometime in 10/15 Gleim
BEC not taken
REG not taken

[trish_1234]

here is the answer

Answer (B) is correct.

In a search for unrecorded retirements, that is, a test of the completeness assertion, the auditor should first determine from the property ledger what assets are recorded and then tour the facilities to determine whether those assets are physically present. The completeness assertion addresses whether all transactions that should be presented (e.g., retirements) are included in the statements. However, in this case, the completeness assertion is closely related to the existence assertion.

AUD 69, 92 7/15 Gleim and Ninja test bank
FAR sometime in 10/15 Gleim
BEC not taken
REG not taken

[ktyx]

Hi ! I would like some inputs about this ….I was doing some of the becker sims for AUD and noticed that round up is a problem. For instance, I would just use a formula directly on the cell and I would end up having a number with over 7 decimals. Now, even though, the number is correct, becker software will take this response as wrong. Anyone know if this would be the same as in the actual exam? Thank you so much in advance!

"A journey of a thousand miles begin with a single step" - LT
" Your dream doesn't have a expiration date, take a deep breath and try again"

B ☺✔
A ☺✔
F ☺✔
R ☺✔
Doneeee Dec 2015

[CPA2B_NJ]

Which of the following statements is correct concerning letters for underwriters, commonly referred to as comfort letters?

A.Letters for underwriters are required by the Securities Act of 1933 for the initial public sale of registered securities.

B.Letters for underwriters typically give negative assurance on unaudited interim financial information.

C.Letters for underwriters usually are included in the registration statement accompanying a prospectus.

D.Letters for underwriters ordinarily update auditors’ opinions on the prior year’s financial statements.

FAR - 50, 78
BEC - 67, 72, 75
AUD - 72, 80
REG - 70, 85

To God be the glory! Forever, amen!

NJ License

[Martin]

b?

Through God all things can happen!

“You never fail until you stop trying.”
― Albert Einstein
When I was young, I used to admire intelligent people;as I grow older, I admire kind people.
“Just keep swimming, just keep swimming.”

FAR= 72-84
Audit= 73-82
BEC= 74-75
Reg=77

[CPA2B_NJ]

Correct!

FAR - 50, 78
BEC - 67, 72, 75
AUD - 72, 80
REG - 70, 85

To God be the glory! Forever, amen!

NJ License

[CPA2B_NJ]

Correct!

FAR - 50, 78
BEC - 67, 72, 75
AUD - 72, 80
REG - 70, 85

To God be the glory! Forever, amen!

NJ License

[CPA2B_NJ]

***Did you know***

Public Company Accounting Oversight Board (PCAOB) Rule 3526 requires that registered public accounting firms make representations to the audit committee regarding independence both prior to accepting the initial engagement and annually thereafter.

FAR - 50, 78
BEC - 67, 72, 75
AUD - 72, 80
REG - 70, 85

To God be the glory! Forever, amen!

NJ License

[Author]

Replies