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The following are commonly performed tests of controls and substantive tests of transactions audit procedures in the sales and collection cycle: 1. Account for a

The following are commonly performed tests of controls and substantive tests of transactions audit procedures in the sales and collection cycle:

1. Account for a sequence of shipping documents and examine each one to make sure that a duplicate sales invoice is attached.

  • 2. Account for a sequence of sales invoices and examine each one to make sure that a duplicate copy of the shipping document is attached.
  • 3. Compare the quantity and description of items on shipping documents with the related duplicate sales invoices.
  • 4. Trace recorded sales in the sales journal to the related accounts receivable master file and compare the customer name, date, and amount for each one.
  • 5. Examine sales returns for approval by an authorized official.
  • 6. Review the prelisting of cash receipts to determine whether cash is prelisted daily.
  • 7. Reconcile the recorded cash receipts on the prelisting with the cash receipts journal and the bank statement for a 1-month period.

Required

  • a. Identify whether each audit procedure is a test of control or a substantive test of transactions.
  • b. State which of the six transaction-related audit objectives each of the audit procedures fulfills.
  • c. Identify the type of evidence used for each audit procedure, such as documentation and observation.

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