Some substantive analytical procedures for revenue

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Some substantive analytical procedures for revenueand accounts receivable (EMGP: Table 10-9)Comparison of revenues with units shipped orproduction levelsAnalysis of daily or weekly revenues around year-endComparison with previous year’s and/or industry:revenue and gross profit percentage by productreceivable turnover and days outstandingallowance for uncollectible accounts as a percentage ofaccounts receivablebad debt expense as a percentage of credit salessales returns as a percentage of revenue5
Substantive tests of revenue transactions(EMGP: Table 10-10)AssertionsAudit ProceduresOccurrenceFor a sample of sales transactions recorded in the salesjournal, vouch the sales invoices back to customer ordersand shipping documents.CompletenessTrace a sample of shipping documents to the details of thesales invoices and to the sales journal and customers’accounts receivable subsidiary ledger.AccuracyCompare prices and terms on a sample of sales invoices withauthorized price list and terms of tradeCut-offCompare the dates on a sample of sales invoices with thedates of shipment and with the dates they are recorded inthe sales journal.ClassificationExamine a sample of sales invoices for proper classificationinto revenue accounts6
Substantive tests of account receivable balances(EMGP: Table 10-10)AssertionsAudit ProceduresExistenceConfirmationof selected accounts receivable.

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Term
Spring
Professor
N/A
Tags
Financial audit, substantive tests, Substantive Analytical Procedures

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