Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

14-23 (Objectives 14-1, 14-3) The following questions deal with audit evidence for the sales and collection cycle. Choose the best response. a. An auditor is

14-23 (Objectives 14-1, 14-3) The following questions deal with audit evidence for the sales and collection cycle. Choose the best response.

a.

An auditor is performing substantive tests of transactions for sales. One step is to trace a sample of debit entries from the accounts receivable master file back to the supporting duplicate sales invoices. What will the auditor intend to establish by this step?

  • (1)Sales invoices represent existing sales.
  • (2)All sales have been recorded.
  • (3)All sales invoices have been correctly posted to customer accounts.
  • (4)Debit entries in the accounts receivable master file are correctly supported by sales invoices.

b.

Which audit procedure is most effective in testing credit sales for overstatement?

  • (1)Trace a sample of postings from the sales journal to the sales account in the general ledger.
  • (2)Vouch a sample of recorded sales from the sales journal to shipping documents.
  • (3)Prepare an aging of accounts receivable.
  • (4)Trace a sample of initial sales orders to sales recorded in the sales journal.

c.

To determine whether internal control relative to the revenue cycle of a wholesaling entity is operating effectively in minimizing the failure to prepare sales invoices, an auditor would most likely select a sample of transactions from the population represented by the

  • (1)sales order file.
  • (2)customer order file.
  • (3)shipping document file.
  • (4)sales invoice file.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advanced Financial Accounting

Authors: Richard Baker, Valdean Lembke, Thomas King, Cynthia Jeffrey

8th Edition

73526916, 978-0073526911

More Books

Students also viewed these Accounting questions

Question

Pollution

Answered: 1 week ago

Question

The fear of making a fool of oneself

Answered: 1 week ago