14. (p) If the checks are misappropriated (stolen) prior to deposit, the total of the amounts posted to the accounts receivable ledger will be greater than the validated bank deposit slip. 15. (n) Invalid sales returns are prevented by requiring approval of returns by the sales department supervisor. 5-15. 1) e 2) a 3) c 4) f 5-16. 1) d 2) a 3) c 4) b 5-17. 1) a 2) a 3) d 4) d 5-18. 1) b 2) b 3) c 4) b 5-19. 1) b 2) a 3) c
5-8 Solutions Manual to Accompany Applied Auditing, 2014 Edition 5-21. 1. a. Accounting for shipping documents to determine that all shipments are billed. b. Observe procedure and, for a sample of shipping documents, examine sales invoices. c. Completeness 2. a. Prelisting of cash receipts and cash register procedures are monitored. b. Compare deposit to cash register total and prelisting. c. Completeness 3. a. A monthly statement should be mailed to customers by someone not involved in handling accounts receivable or cash. b. Observe procedure and examine follow-up files. c. Existence or occurrence. 4. a. For goods shipped, goods should be counted and descriptions and quantities should be compared to quantities and descriptions on sales orders and shipping documents prior to shipping. b. Observe procedure. For a sample, examine signature on documents evidencing performance. c. Rights and obligations. 5. a. Accounting for all sales invoice numbers to ensure that all are recorded. b. Observe procedure. For a sequence of invoices, account for the numerical sequence. c. Completeness 6. a. Shipping documents should be accounted for to determine that all items shipped are billed. b. Observe procedures. Examine invoices for a sample of shipping documents. c. Completeness 7. a. For goods shipped, goods should be counted and descriptions and quantities should be compared to quantities and descriptions on sales orders and shipping documents prior to shipping. b. Observe procedure. For a sample, examine signature on documents evidencing performance. c. Rights and obligations 8. a. Prenumbered sales invoices should be used and accounted for to determine that all sales are recorded (in the proper period). b. Observe procedure. Examine entries for a sequence of sales invoices in sales journal. c. Completeness
Audit of the Revenue and Collection Cycle: Tests of Controls and Substantive Tests of Transactions 5-9 5-22. 1. a. Existence, completeness b. Cash may be misappropriated or lapping may occur. c. Observe separation of duties and inquire of personnel about their responsibilities. 2. a. Existence, completeness b. Fictitious cash receipts may be recorded or cash receipts may be misappropriated. c. Observe whether a prelisting is prepared and inquire of preparer about the procedures followed. 3. a. Existence, completeness b. Cash may be unrecorded or misappropriated. c. Observe the procedure and inquire of personnel who perform the procedure. 4. a. Existence b. Bank reconciliations may hide shortages. c. Examine bank reconciliations and determine that preparer does not have conflicting interests.
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- Fall '17
- invoice, Sales Journal