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Audit of Receivables Concept
Audit of Receivables Concept
Audit of Receivables Concept
5. Verify mathematical accuracy of the accounts receivable aging schedule and trace it to the accounts
receivable subsidiary ledger.
6. Test the adequacy of the allowance for uncollectible accounts.
Presentation and disclosure: Sales and accounts receivable are properly presented and disclosed in
accordance with GAAP.
7. Review financial statements and perform analytical procedures to determine whether accounts are
classified and disclosed in accordance with GAAP.
Sales Transactions
Completeness: Sales transactions that occurred are recorded
1. For a sample of shipping documents, trace sales invoice and entry into sales journal and accounts
receivable subsidiary ledger. Perform cutoff tests.
Occurrence: Recorded sales are for shipments actually made to customers
2. For a sample of entries in the sales journal, compare sales invoice copy, customer order, and sales
invoice.
Classification: Sales and accounts receivable transactions have been recorded in the proper accounts
3. For a sample of entries in the sales journal, verify the accuracy of account coding.
Accuracy (Valuation): Sales are correctly billed and recorded
4. For a sample of entries in the sales journal, (a) examine sales invoice, shipping document, and
customer for consistency of descriptions and quantities; (b) examine sales orders for credit approval; and
(c) check prices and extensions. Foot sales journal and general ledger account.
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