An auditor is testing the 'occurrence' assertion for sales. Which of the following directions of testing is appropriate?

Answer options:

Tracing from shipping documents to the sales journal.

Vouching from the sales journal to the shipping documents.

Recalculating the sales invoices.

Comparing sales to the budget.

How to approach this question

Occurrence = Vouch Back (Journal -> Source). Completeness = Trace Forward (Source -> Journal).

Full Answer

B.Vouching from the sales journal to the shipping documents.✓ Correct

Vouching from the sales journal to the shipping documents.

To test occurrence (validity), the auditor selects items from the accounting records (Sales Journal) and vouches them back to the supporting source documents (Shipping Documents) to ensure the transaction actually took place.

Common mistakes

Confusing Vouching (Occurrence) with Tracing (Completeness).

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