The Auditor Is Concerned That a Client Is Failing to Bill

question 18

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) select a sample of duplicate sales invoices and trace each to related shipping documents.
• B) trace a sample of shipping documents to related duplicate sales invoices.
• C) trace a sample of Sales Journal entries to the Accounts Receivable subsidiary ledger.
• 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:

Annual Salary

The total amount of money that an employee earns in one year.

Operations

Operations refer to the day-to-day activities involved in the running of a business for the purpose of producing value for the stakeholders; it encompasses everything from manufacturing goods to providing services.

Division of Income

The allocation of profit among different heads or sections for financial analysis or taxation purposes.