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10 Questions

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Revenue and Collection Cycle Audit Quiz

Created by

@VictoriousInsight

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Questions and Answers

Which document facilitates the recording of cash receipts?

Uncollectible Account Authorization Form

Credit Memo

Remittance Advice (correct)

Sales Invoice

Which journal is used to record sales returns and allowances?

General Journal

Cash Receipts Journal

Accounts Receivable Master File/Subsidiary Ledger

Sales Journal (correct)

What is the purpose of the Uncollectible Account Authorization Form?

To initiate shipment of the goods

To facilitate recording of cash receipts

To indicate authority to write an account receivable off as uncollectible (correct)

To indicate the beginning balance of accounts receivable

Which document provides evidence that a seller has reduced the amount previously billed to a customer?

Credit Memo Signup and view all the answers

What is the purpose of the Monthly Statement?

To report a beginning balance and transactions that occurred during the period Signup and view all the answers

Which document provides evidence that a customer actually ordered the goods?

Customer’s Purchase Order Signup and view all the answers

Which document contains the seller’s understanding of the sales terms?

Sales Order Signup and view all the answers

Which account is affected by collections on accounts and cash sales?

Cash in Bank Signup and view all the answers

Which activity does the Revenue and Collection Cycle consist of?

Activities relating to the exchange of goods and services with customers and the collection of the revenue in cash Signup and view all the answers

Which account is typically affected by uncollectible accounts provisions and write-offs?

Allowance for Uncollectible Accounts Signup and view all the answers

Study Notes

Cash Receipts and Sales

The Cash Receipts Journal facilitates the recording of cash receipts.
The Sales Returns and Allowances Journal is used to record sales returns and allowances.

Uncollectible Accounts

The Uncollectible Account Authorization Form is used to authorize the write-off of uncollectible accounts.
The Credit Memorandum provides evidence that a seller has reduced the amount previously billed to a customer.

Customer Orders and Sales Terms

The Customer Order provides evidence that a customer actually ordered the goods.
The Sales Invoice contains the seller’s understanding of the sales terms.

Accounts and Revenue Cycle

The Cash account is affected by collections on accounts and cash sales.
The Revenue and Collection Cycle consists of sales, accounts receivable, and cash receipts.

Uncollectible Accounts Provision and Write-Offs

The Allowance for Doubtful Accounts is typically affected by uncollectible accounts provisions and write-offs.

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Description

Take this quiz to test your knowledge of the audit of the revenue and collection cycle, including tests of controls and substantive tests of transactions. The quiz covers activities related to the exchange of goods and services with customers, and the collection of revenue in cash. It includes classes of transactions for trading concerns such as sales (cash and credit) and sales adjustments (discounts, returns, allowances, and uncollectible amounts).