[nishvik]

Hello Ninja’s,

Was doing MCQ’s and have a problem understanding these MCQ’s. So posting them here if someone can explain them and also if it might benefit other people preparing for AUD to come through this MCQ.

MCQ 1:

In updating a computerized accounts receivable file, the total used as a batch control to verify the accuracy of posting cash remittances is:

a.Net sales plus discounts taken by customers.

b.Cash deposits minus discounts taken by customers

c.Cash deposits plus discounts taken by customers.

d..Net sales.

This answer(c) is correct.

The control total for the posting of accounts receivable should be the total amount of reductions in accounts receivable. The total of the cash deposits plus the discounts taken by customers should equal the total reduction in accounts receivable for the batch of transactions processed. This batch control is a financial total, one which has inherent informational significance as opposed to such other batch controls as hash totals or record counts.

MCQ 2:

Alpha Company uses its sales invoices for posting perpetual inventory records. Inadequate internal control over the invoicing function allows goods to be shipped that are not invoiced. The inadequate controls could cause an

a.Understatement of revenues, receivables, and inventory.

b.Understatement of revenues and receivables and an overstatement of inventory.

c.Overstatement of revenues and receivables and an understatement of inventory.

d.Overstatement of revenues, receivables, and inventory.

This answer (b) is correct.

If goods are shipped before the sales are invoiced, inventory will not be credited for the shipments, thus overstating inventory. Moreover, if the accounting function does not receive copies of the invoices, sales and receivables will not be recorded, with the consequent understatement of those accounts.

I believe understanding these MCQ’s would also help to understand which accounts will be affected and debited/credited in journal entries.

Will appreciate your help.

Thanks

FAR- 79 -->Becker self study, Final review & Flashcards
REG -72-->Becker ,76-->Becker plus Wiley test bank
AUD- 73 Becker,72-->Becker+Wiley,69-->Added ninja notes,89 --> Added Gleim review
BEC- 84 Becker plus Wiley Test bank

I am Done !!!!