1. Compare the quantity and description of items on duplicate sales invoices wit
ID: 2600409 • Letter: 1
Question
1.
Compare the quantity and description of items on duplicate sales invoices with related shipping documents.
2.
Trace recorded cash receipts in the accounts receivable master file to the cash receipts journal and compare the customer name, date, and amount of each one.
3.
Examine duplicate sales invoices for an indication that unit selling prices were compared to the approved price list.
4.
Examine duplicate sales invoices to determine whether the account classification for sales has been included on the document.
5.
Examine the sales journal for related-party transactions, notes receivable, and other unusual items.
6.
Select a sample of customer orders and trace the document to related shipping documents, sales invoices, and the accounts receivable master file for comparison of name, date, and amount.
7.
Perform a proof of cash receipts.
8.
Examine a sample of remittance advices for approval of cash discounts.
9.
Account for a numerical sequence of remittance advices and determine whether there is a cross-reference mark for each one, indicating that it has been recorded in the cash receipts journal.
Requirement a. Identify whether each audit procedure is a test of control or substantive test of transactions.
Test of control or a
Question
substantive test of transactions
1.
Substantive test of transactions
2.
Substantive test of transactions
3.
Test of control
4.
Test of control
5.
Substantive test of transactions
6.
Substantive test of transactions
7.
Substantive test of transactions
8.
Test of control
9.
Test of control
Requirement b. State which transaction-related audit objective(s) each of the audit procedures fulfills.
Transaction-related
Question
audit objective(s)
1.
Accuracy
2.
Posting and Summarization
3.
Accuracy
4.
Classification
5.
Classification
6.
Completeness, Accuracy, Timing, Posting and Summarization
7.
Occurrence, Completeness, Accuracy, and Timing
8.
Accuracy
9.
Completeness
Requirement c. For each test of control in part a, state a substantive test that could be used to determine whether there was a monetary misstatement. (Complete all answer boxes. Select "Not applicable" for any questions that the test of controls in part a does not apply.)
Question
Type of substantive test
1.
2.
3.
4.
5.
6.
7.
8.
9.
1.
Compare the quantity and description of items on duplicate sales invoices with related shipping documents.
2.
Trace recorded cash receipts in the accounts receivable master file to the cash receipts journal and compare the customer name, date, and amount of each one.
3.
Examine duplicate sales invoices for an indication that unit selling prices were compared to the approved price list.
4.
Examine duplicate sales invoices to determine whether the account classification for sales has been included on the document.
5.
Examine the sales journal for related-party transactions, notes receivable, and other unusual items.
6.
Select a sample of customer orders and trace the document to related shipping documents, sales invoices, and the accounts receivable master file for comparison of name, date, and amount.
7.
Perform a proof of cash receipts.
8.
Examine a sample of remittance advices for approval of cash discounts.
9.
Account for a numerical sequence of remittance advices and determine whether there is a cross-reference mark for each one, indicating that it has been recorded in the cash receipts journal.
Explanation / Answer
1. Compare the quantity and description of items on duplicate sales invoices with related shipping documents.
(a) Type of test - Test of control
(b) Transaction related Audit objective - Existence, Sales that have been recorded for shipments are made for customers actually.
(c) Type of evidence: Documentation
2. Trace recorded cash receipts in the accounts receivable master file to the cash receipts journal and compare the customer name, date, and amount of each one.
(a) Type of test : Substantive test of transactions
(b) Transaction related Audit objective: Accuracy, sales recorded are correctly billed and shipped
(c) Type of evidence: Documentation
3. Examine duplicate sales invoices for an indication that unit selling prices were compared to the approved price list.
(a) Type of test : Test of controls
(b) Transaction related Audit objective: Accuracy
(c) Type of evidence: Inspection
4. Examine duplicate sales invoices to determine whether the account classification for sales has been included on the document.
(a) Type of test: Test of controls
(b) Transaction related Audit objective: classification
(c) Type of evidence: Inspection
5. Examine the sales journal for related-party transactions, notes receivable, and other unusual items.
(a) Type of test: Substantive test of transactions
(b) Transaction related Audit objective: Classification
(c) Type of evidence: Inspection
6. Select a sample of customer orders and trace the document to related shipping documents, sales invoices, and the accounts receivable master file for comparison of name, date, and amount.
(a) Type of test: Substantive test of transactions
(b) Transaction related Audit objective: completeness, Accuracy, occurrence timing
(c) Type of evidence: Inspection
7. Perform a proof of cash receipts.
(a) Type of test: Substantive test of transactions
(b) Transaction related Audit objective: completeness, Accuracy, occurrence timing
(c) Type of evidence: Inspection,
In order to ensure whether the discount that have been given appropriate, evaluate or perform the aging schedule of debtors
8. Examine a sample of remittance advices for approval of cash discounts.
(a) Type of test: Test of control
(b) Transaction related Audit objective: Occurrence
(c) Type of evidence: Documentation
By looking at the cash ledger, trace and inspect the cash recordings and compare them to cash receipt journal to verify if those recordings are properly documented
9. Account for a numerical sequence of remittance advices and determine whether there is a cross-reference mark for each one, indicating that it has been recorded in the cash receipts journal.
(a) Type of test : Test of control
(b) Transaction related Audit objective : Completeness
(c) Type of evidence : Re performance
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