You are planning a substantive test of details to determine if all recorded sales revenue transactions are supported by a sales contract with the customer and a shipping document. What is the appropriate population to select your sample for this test?

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BlackTom AI · Accepted Answer

The question asks about selecting the appropriate population for a substantive test of details to verify that all recorded sales revenue transactions are supported by a sales contract with the customer and a shipping document.
Option 1: 'Sales contracts with the customer' would be a population if you were testing whether every contract exists or matches a recorded sale, but this test focuses on the sales transactions that are already recorded, not the contracts themselves as the base population.
Option 2: 'Shipping documents' could be used to test cutoffs or shipment existence, yet the objective here is to confirm that recorded sales are supported by both a contract and a shipping document, which points to starting with the recorded transactions themselves rather than the supporting documents alone.
Option 3: 'Recorded sales transactions' is the correct population for a substantive test of details aiming to ensure each recorded sale has appropriate supporting documentation (contract and shipping), since you are examining the details of what has already been recorded.
Option 4: 'Cash collections from the customer' pertains to cash receipt testing and not to the completeness or accuracy of the recorded sales transactions or their supporting documents, making it an incorrect population for this test.
In summary, the substantive test of details is typically applied to the accounting records themselves to verify that each recorded transaction is properly supported, which aligns with selecting 'Recorded sales transactions' as the population.

You are planning a substantive test of details to determine if all recorded sales revenue transactions are supported by a sales contract with the customer and a shipping document. What is the appropriate population to select your sample for this test?Single choice

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