The following (1 through 18) are the balance-related, transaction-related, and presentation and disclosure related audit objectives. Balance-Related Audit Objectives 1.


The following (1 through 18) are the balance-related, transaction-related, and presentation and disclosure related audit objectives.
Audit Objectives
1. Existence
2. Completeness
3. Accuracy
4. Classification
5. Cutoff
6. Detail tie-in
7. Realizable value
8. Rights and obligations
Audit Objectives
9. Occurrence
10. Completeness
11. Accuracy
12. Classification
13. Timing
14. Posting and summarization
Presentation and Disclosure
Audit Objectives
15. Occurrence and rights
16. Completeness
17. Accuracy and valuation
18. Classification and understandability

Identify the specific audit objective (1-18) that each of the following specific audit procedures (a. through l.) satisfies in the audit of sales, accounts receivable and cash receipts for fiscal year ended December 31, 2011.
a. Examine a sample of duplicate sales invoices to determine whether each one has a shipping document attached.
b. Add all customer balances in the accounts receivable trial balance and agree the amount to the general ledger.
c. For a sample of sales transactions selected from the sales journal, verify that the amount of the transaction has been recorded in the correct customer account in the accounts receivable subledger.
d. Inquire of the client whether any accounts receivable balances have been pledged as collateral on long-term debt and determine whether all required information is included in the footnote description for long-term debt.
e. For a sample of shipping documents selected from shipping records, trace each shipping document to a transaction recorded in the sales journal.
f. Discuss with credit department personnel the likelihood of collection of all accounts as of December 31, 2011 with a balance greater than $100,000 and greater than 90 days old as of year end.
g. Examine sales invoices for the last five sales transactions recorded in the sales journal in 2011 and examine shipping documents to determine they are recorded in the correct period.
h. For a sample of customer accounts receivable balances at December 31, 2011, examine subsequent cash receipts in January 2012 to determine whether the customer paid the balance due.
i. Determine whether all risks related to accounts receivable are adequately disclosed.
j. Foot the sales journal for the month of July and trace postings to the general ledger.
k. Send letters to a sample of accounts receivable customers to verify whether they have an outstanding balance at December 31, 2011.
l. Determine whether long-term receivables and related party receivables are reported separately in the financial statements.

Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...

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Related Book For  answer-question

Auditing and Assurance services an integrated approach

ISBN: 978-0132575959

14th Edition

Authors: Alvin a. arens, Randal j. elder, Mark s. Beasley

Question Details
Chapter # 6
Section: Review Questions
Problem: 30
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Question Posted: October 10, 2012 07:19:43