To test the existence assertion for recorded receivables, an auditor would select a sample from theSelect one:a.sales orders fileb.shipping documents (bills of lading) filec.accounts receivable subsidiary ledgerd.customer purchase orders
Question
To test the existence assertion for recorded receivables, an auditor would select a sample from theSelect one:a.sales orders fileb.shipping documents (bills of lading) filec.accounts receivable subsidiary ledgerd.customer purchase orders
Solution
To test the existence assertion for recorded receivables, an auditor would select a sample from the
Select one: a. sales orders file b. shipping documents (bills of lading) file c. accounts receivable subsidiary ledger d. customer purchase orders
Step-by-step reasoning:
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Existence Assertion: This assertion is concerned with whether the receivables that are recorded actually exist. The auditor needs to verify that the receivables are not fictitious.
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Sales Orders File: This file contains orders placed by customers. While it shows intent to purchase, it does not confirm that the goods were shipped or that the receivable exists.
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Shipping Documents (Bills of Lading) File: These documents provide evidence that goods have been shipped to customers. This is a strong indicator that the receivable exists because it shows that the company has fulfilled its part of the transaction.
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Accounts Receivable Subsidiary Ledger: This ledger contains detailed information about each receivable. However, selecting from this ledger only shows that the receivable is recorded, not that it actually exists.
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Customer Purchase Orders: These are orders from customers requesting goods or services. Like sales orders, they do not confirm that the goods were shipped or that the receivable exists.
Given the need to verify the existence of recorded receivables, the most appropriate source to select a sample from is:
b. shipping documents (bills of lading) file
Similar Questions
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