9 With the permission of the client the auditor can get the outstanding balance

9 with the permission of the client the auditor can

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9) With the permission of the client, the auditor can get the outstanding balance of the custoiners duly confirmed from them. This may be done at least in some cases as a test check. 5.5 SALES RETURNS If customers find that goods are defective or are not as per the ordkr, they return thein to the supplier. On receipt of such goods an entry should be made in the Return Inward Book by the gate-keeper and, by a cleik, in the Stock Register. All entry should also be made in Sales Returns Book. A credit note, duly singed by a responsible officer, should be sent to the customer. The auditor can vouch sales returns by comparing entries in gate-keeper's ReturnS Inwards Rook and the carbon copies of credit notes sent to the customers. The auditor .-should ensure that all goods returned by customers are recorded in both the Stock Register and the SalesARetums Book. If this is not done, the stock and sales will get inflated and the business will show fictitious profit. The auditor should carefully examine the internal check system in operation iegardillg sales returns. He should specially checlc a few entries in the Sales Returns Book relating to the the end of the year. Ile should check a few castings of Sales Return Bookand 5.6 GOODS SENT ON CONSIGNMENT When goods are sent to various agents at different cities for sale on co~nmission basis, these art: called 'goods sent on consignment'. The agents hold tlie goods, on behalf of the principal at his risk. Merely sending of goods to agents cannot be termed as sales. Sale will take place when agents actually sell tile goods. When goods are sent on consignment, an entry should be made in 'Consignment Outward Journal'. ~ntries in this joulnal can be vouched with the help of the amount shown in the profortna invoice, correspondence with the agents, the consignment accounts of different agents, the account sales furnished by the agents and the
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Vouching and Verifir- I cbntracts uiith the agents. Unsold goods lying with agents should be shown on the credit side of the Trading Account as well as in the Balance sheet as 'Stock on consignment'. The stock on consignment sllould be valued at cost or market price, whichever is lower. If the goods have been sent to agents at more tlirui cost i.e. a1 proforma invoice price, the necessary consignment stock reserve should be created. Provision should also be made for any loss likely to arise in future. 5.7 PACKAGES AND EMPTIES - - Many a times, sellers send goods to cuslomcrs in packages like bottles, casks, cylinders, drun~c,, crates, cans which are returnable. You might notice that cold drink bottles are 1 letur'i~~thlc to sodawater companies. It is but natural that acculate accounts should be kept :~bour ctrn~aincrs or l~uckages supplied to buyers and returned by them. It is better to maintain :I sepicrate "Packages and Emptics Account" in the sales journal. This account sliould be debited when new empties are purchased. The customers' account should be deblied and packsgcs and empties account be credited when these are supplied to customers.
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  • Spring '18
  • sai sekhar
  • Balance Sheet, Capital Expenditure, Expense, Generally Accepted Accounting Principles, invoice

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