Assume the following general flow of documents in an accounting system. Reply to the following questions:

a. The auditors are concerned about source documents that reflect valid transactions that have not been recorded in the journals. Which procedure would be most effective?
(1) Trace from source documents to journals.
(2) Vouch from journals to source documents.
(3) Either (1) or (2).
b. The auditors are concerned about transactions that have been recorded in the journals (and subsequently in the ledgers) that are not valid€”that is, a transaction is recorded, but it did not actually occur (e.g., a fraudulent overstatement of sales). Which procedure would be most effective?
(1) Trace from source documents to journals.
(2) Vouch from journals to source documents.
(3) Either (1) or (2).
c. The auditors are concerned about transactions that have been recorded for improper amounts. Which procedure would be most effective?
(1) Trace from source documents to journals.
(2) Vouch from journals to source documents.
(3) Either (1) or (2).
d. Tracing from source documents to journals most directly tests:
(1) Completeness (understatements).
(2) Existence (overstatements).
e. Vouching from journals (or ledgers) to source documents most directly tests:
(1) Completeness (understatements).
(2) Existence(overstatements).

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Source Ledgers Journals Documents