To Test for Recorded Sales for Which There Were No

question 38

Multiple Choice

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

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

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Definitions:

Legal Entities

Organizations that have legal rights and obligations, including the ability to enter into contracts and own property.

Corporate Liability

The legal responsibility of a corporation for the actions of its directors, officers, employees, and agents, including debts and legal violations.

Shareholders

Individuals or entities that own one or more shares of stock in a corporation, giving them certain rights and interests in the company.

Double Taxation

A situation where the same income is taxed twice, often referring to corporate profits taxed at both the company and shareholder levels when dividends are distributed.