To Test for Recorded Sales for Which There Were No

question 92

Multiple Choice

To test for recorded sales for which there were no actual shipments, the auditor traces from the:

• A) bill of lading to the supporting customer order and sales order.
• B) bill of lading to the sales journal.
• C) sales journal to the bill of lading.
• D) sales journal to the accounts receivable subsidiary ledger.

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Definitions:

Revenue Recognition

The accounting principle that revenue should be recognized in the accounting period in which it is earned and realizable, regardless of when cash is received.

Business Transactions

Economic events or conditions that affect the financial position of a company, which are recorded as entries in accounting records.

Time Period

A specific duration during which financial transactions are recorded and reported in financial statements.

Quality

The degree to which a product or service meets the requirements and expectations of customers.