The Auditor Is Concerned That a Client Is Failing to Bill

question 77

Multiple Choice

The auditor is concerned that a client is failing to bill customers for shipments. An audit procedure that would gather relevant evidence would be to:

• A) trace a sample of shipping documents to related duplicate sales invoices.
• B) trace a sample of Sales Journal entries to the Accounts Receivable subsidiary ledger.
• C) select a sample of duplicate sales invoices and trace each to related shipping documents.
• D) compare the total of the Schedule of Accounts Receivable with the balance of the Accounts Receivable account in the general ledger.

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Definitions:

Product Cost

refers to the total expense incurred to manufacture a product or deliver a service, encompassing direct labor, materials, and overhead costs.

Drill Bits

Tools used for creating cylindrical holes, often seen in various sizes and made from different materials suitable for specific drilling needs.

Assembly Area

A specific section in a manufacturing facility where components are put together to form the final product.

Materials Requisition

A document used in the manufacturing process to request the transfer of materials from the storeroom to the production floor.