X x x accounts receivable trade 6 agreement of

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X X X Accounts Receivable trade 6 Agreement of subledger with general ledger: Agree receivables subledger to the general ledger and investigate large (>60 percent of PM) and unusual reconciling items. X X 7 Analytical review: Compare the accounts receivable aging schedule with those of prior periods and note any significant changes (e.g., changes in major customers, in major customers’ balances in the percentage of overdue accounts, in the proportion of credit balances). Obtain explanations for unexpected changes. X X X X 8 Confirmations and subsequent cash receipts: Verify the existence of accounts receivable trade through confirmation or subsequent cash receipts or a combination of those procedures. (a) Select customer account balances greater than 60 percent of PM to prepare and send positive confirmations of year-end balances. X X X X
26 # Existence/occurr ence Valuation/ accuracy Completeness Rights and obligations/ cut-off Presentation and disclosure (b) For confirmation requests for which no reply is received, vouch customer account balance through cash receipts received after year end. If amounts still remain untested, then vouch to the supporting invoice and shipping document. 9 Accounts receivable cut-off: Inspect sales journal, invoices, shipping documents, and other supporting documents five days before and five days after the year- end date. Select those transactions greater than 60 percent of PM and verify that the sales were recorded in the proper period. X X 10 Credit balances and unusual items: Scan the Accounts Receivable listing and identify any credit balances and investigate large items. X X 11 Returned goods: Evaluate significant assumptions made regarding the frequency and percentage of goods returned for which refunds are given and verify mathematical accuracy of respective amount. X X X X X X X Revenue/Sales 12 Analytical review: Perform an analytical review and investigate any significant changes or lack of expected changes X X X 13 Analytical review of gross margin : Review the monthly/quarterly trading results to gain an understanding of the trends relating to gross margin by major product groups, geographical areas, and income generating units. Investigate unusual discrepancies, trends, and relationships. X X X
27 # Existence/occurr ence Valuation/ accuracy Completeness Rights and obligations/ cut-off Presentation and disclosure 14 Revenue recognition procedures: Test recorded sales invoices to the records of products shipped; agree dates, customers, products, quantities, prices, and amounts. Select the sample so as to ensure at least 25 percent of the revenue balance has been tested. X 15 Sales cut-off: Refer to work performed in Accounts Receivable. X X 16 Credit memos: Investigate large or unusual credit memos issued subsequent to year end. Coordinate with the work performed in Accounts Receivable.

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