An Auditor Is Testing Sales Transactions

question 57

Multiple Choice

An auditor is testing sales transactions.One step is to trace a sample of debit entries from the accounts receivable subsidiary ledger back to the supporting sales invoices.What would the auditor intend to establish by this step?

• A)All sales invoices have been recorded.
• B)Sales invoices represent bona fide sales.
• C)Debit entries in the accounts receivable subsidiary ledger are properly supported by sales invoices.
• D)All sales invoices have been properly posted to customer accounts.

Realize the importance of quality in manufacturing and service contexts and how it is measured.

Grasp the concepts of supply chain management and its critical role in operations.

Acknowledge the environmental and sustainability considerations in manufacturing and operations systems.

Comprehend the strategies for continuous improvement and total quality management (TQM) within organizations.

---

Definitions:

Overapplied

This term relates to a situation where the allocated costs in accounting exceed the actual indirect costs.

Underapplied

A situation where the allocated overhead cost is less than the actual overhead cost incurred.

Work in Process Account

An account used in accounting to track the costs associated with the production of goods that are not yet complete.

Ending Balance

The amount of money in an account at the end of a period, after all additions and subtractions have been accounted for.