Chapter 14 Slides

Chapter 14 Slides - 14 - 1 Click to edit Master subtitle...

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Unformatted text preview: 14 - 1 Click to edit Master subtitle style 14 - 1 Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Chapter 14 14 - 2 Importance of the Chapter This chapter is the first to deal with specific evidence in an audit area. We will apply the concepts of the previous chapters to the sales and collection cycle. We will use this as one of our representative cycles because we will not be discussing every cycle. Discussing every cycle leads to significant repetition with minimal incremental learning. 14 - 3 4/12/10 Accounts in the Sales and Collection Cycle Sales Cash sales Sales on account Accounts Receivable Cash receipts Sales returns and allowances Write-off of uncollectible accounts Beginning balance Sales on account Ending balance Cash in Bank Cash Discounts Taken Bad Debt Expense Sales Returns and Allowances There are five classes of transactions in the sales and collection cycle. 1 1 2 3 14 - 4 4/12/10 Accounts in the Sales and Collection Cycle Accounts Receivable Cash receipts Sales returns and allowances Write-off of uncollectible accounts Beginning balance Sales on account Ending balance Allowance for Uncollectible Accounts Write-off of uncollectible accounts Beginning balance Estimate of bad debt expense Ending balance Bad Debt Expense 4 5 14 - 5 Learning Objective 2 Describe the business functions and the related documents and records in the sales and collection cycle. Lets see how well you can describe a typical sales transaction without using your textbooks. 14 - 6 4/12/10 Sales Transaction Accounts Sales Accounts receivable Business Functions Processing customer orders...
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This note was uploaded on 04/11/2010 for the course ACCT 4510 taught by Professor Lord during the Spring '10 term at Bowling Green.

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Chapter 14 Slides - 14 - 1 Click to edit Master subtitle...

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