ExpertHard1 markMultiple Choice
CPA · Question 32 · Area III: Procedures
An auditor is testing the completeness of sales. Which of the following audit procedures should the auditor perform?
An auditor is testing the completeness of sales. Which of the following audit procedures should the auditor perform?
Answer options:
A.
Select a sample of entries in the sales journal and vouch them to shipping documents.
B.
Select a sample of shipping documents and trace them to the sales invoices and sales journal.
C.
Select a sample of accounts receivable and confirm them with customers.
D.
Review the sales journal for unusually large transactions.
How to approach this question
Direction of Testing: Vouching (Journal -> Source) = Existence. Tracing (Source -> Journal) = Completeness.
Full Answer
B.Select a sample of shipping documents and trace them to the sales invoices and sales journal.✓ Correct
Select a sample of shipping documents and trace them to the sales invoices and sales journal.
To test Completeness (understatement), the auditor starts from the source documents (Shipping Documents) and traces them forward to the accounting records (Sales Journal). This ensures that all goods shipped were actually recorded as sales.
Common mistakes
Confusing Vouching (Existence) with Tracing (Completeness).
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