11 -- Evidence—The Sales-Receivables-Cash Cycle

11 -- Evidence—The Sales-Receivables-Cash...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
CPA AUDITING - STUDY UNIT 11 Evidence – The Sales-Receivables-Cash Cycle: Core Concepts Apply the CAVE CROC acronym as a mnemonic for management’s assertion. A. Substantive Testing of Sales and Receivables 1. The Completeness assertion is tested by reconciling the subsidiary and general ledgers; calculating and comparing ratios for the current period with those of prior periods and industry norms; accounting for the numerical sequence of sales-related documents, such as sales orders, shipping documents, and invoices; and vouching shipping documents back to sales invoices and journal entries. 2. The Accuracy assertion is tested by obtaining a management representation letter that includes assertions relating to sales and receivables; and determining whether an entity has appropriately identified its reportable operating segments. 3. The Valuation and allocation assertion is tested by aging accounts receivable; tracing subsequent cash receipts; and reviewing delinquent customers’ credit ratings. 4.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 2

11 -- Evidence—The Sales-Receivables-Cash...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online