SALES AA_Chapter_22

SALES AA_Chapter_22 - Chapter 22 Business cycle: revenue...

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
© Peter T. Y. Lau and Nelson C. Y. Lam © Pilot Publishing Co. Ltd. 2009 Auditing and Assurance in Hong Kong 1 Chapter 22 Business cycle: revenue model ; Operating Cycle of a Merchandising Company (3 steps) Relevant GAAPs (measurement & disclosure) Terminologies: 2/10, n/30; FOB; Specific Audit Objectives, key control; Trade receivable sub-ledger/ control account/allowances/ written-off Activity: 1. To discuss all sales related accounting entries; 2. Accountants rely on which documents in preparing the entries, why? If not, what happen? 3. Suggest audit procedures to check the relevant transactions. 4. Discuss whether auditors should rely on clients’ control procedures.
Background image of page 1

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

View Full DocumentRight Arrow Icon
© Peter T. Y. Lau and Nelson C. Y. Lam © Pilot Publishing Co. Ltd. 2009 Auditing and Assurance in Hong Kong 2 Agenda Avg. Number of Days to Collect A/R This ratio helps judge the liquidity of a company’s accounts receivable. 1. Income Tax Regulations and Financial Reporting 2. Management of Accounts Receivable (Credit terms; Factoring Accounts Receivable; credit card sales 1. Sales and Receipts Cycle 2. Key Documents for Sales 3. Specific Audit Objectives for Sales 4. Key Internal Controls over Sales 5. Audit Procedures to Verity Sales 6. Trade Receivables 7. Key Documents for Trade Receivables Key Internal Controls over Trade Receivables Audit Procedures on Trade Receivables 10. Impairment Loss 11. External Confirmation 12. Key Internal Controls for Cash Receipts 13. Audit Procedures on Cash Receipts
Background image of page 2
© Peter T. Y. Lau and Nelson C. Y. Lam © Pilot Publishing Co. Ltd. 2009 Auditing and Assurance in Hong Kong 3 Sales (credit sales) Trade Receivables Cash Receipts (cash sales) (customers payments) 1. Sales And Receipts Cycle
Background image of page 3

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

View Full DocumentRight Arrow Icon
© Peter T. Y. Lau and Nelson C. Y. Lam © Pilot Publishing Co. Ltd. 2009 Auditing and Assurance in Hong Kong 4 2. Key Documents for Sales Customer order Sales order Goods despatch note Credit note Sales invoice Sales ledger
Background image of page 4
© Peter T. Y. Lau and Nelson C. Y. Lam © Pilot Publishing Co. Ltd. 2009 Auditing and Assurance in Hong Kong 5 3. Specific Audit Objectives for Sales Occurrence : Recorded sales transactions are for goods and services actually sold to non-fictitious customers. Completeness : All sales transactions that should have been recorded have been recorded. Accuracy : Sales transactions have been recorded appropriately. Classification : Sales transactions have been recorded in the proper accounts. Cut-off : Sales transactions have been properly recorded in the correct accounting period. Posting and Summarization : Sales transactions are properly included in the sales sub-ledgers and are correctly summarized.
Background image of page 5

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

View Full DocumentRight Arrow Icon
© Peter T. Y. Lau and Nelson C. Y. Lam © Pilot Publishing Co. Ltd. 2009 Auditing and Assurance in Hong Kong 6 4. Key Internal Controls Over Sales Segregation of duties; Proper credit policy and credit approval procedures; Maximum credit limit set for new and existing customers; Maintain pre-numbered sales orders; Establish standard sales terms and sales price; Proper authorization on delivery;
Background image of page 6
Image of page 7
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 12/21/2010 for the course ACCT 410 taught by Professor Sallyli during the Fall '10 term at Hong Kong Shue Yan.

Page1 / 30

SALES AA_Chapter_22 - Chapter 22 Business cycle: revenue...

This preview shows document pages 1 - 7. Sign up to view the full document.

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