An auditor is planning a substantive test of details of the occurrence assertion for Sales Revenue transactions. The audit client’s performance obligations are satisfied when the product is shipped to the customer. Which of the following procedures is likely most effective for this test?

Question

BlackTom AI · Accepted Answer

When planning substantive tests of details for the occurrence assertion in Sales Revenue, we want evidence that revenue actually occurred and corresponds to shipments made to customers.
Option 1: Start with the shipping documents and verify to the sales journal entries. This approach directly ties the shipment event (evidence of performance obligation satisfaction) to recorded revenue in the sales journal, supporting that revenue occurred and was recorded for the correct period and shipment. It creates an appropriate linkage between source documents (shipping documents) and the recording of revenue.
Option 2: Start with recorded cash receipts entries and verify to the sales journal entries. While cash receipts can support that cash was received, they are not the最 direct evidence of the occurrence of revenue. Some sales may be recorded but later reversed or uncollected, and this path could miss shipments not yet collected or misstate the timing. Therefore this is less effective for occurrence.
Option 3: Start with recorded sales revenue entries and verify to the shipping documents. This path starts with the already recorded revenue and then checks against shipping documents, which is problematic for occurrence testing because it risks starting with potentially misstated revenue and then trying to corroborate it, rather than independently verifying that revenue corresponds to actual shipments.
Option 4: Start with recorded sales revenue entries and verify to the cash receipts journal entries. This linkage checks that revenue has a matching cash receipt, which addresses occurrence only insofar as cash collection is concerned, but it does not directly confirm that the revenue was supported by the actual shipment of goods. It also may miss situations where revenue was recognized without shipment or where shipments occurred but cash is uncollected.
In summary, option 1 provides the most direct and effective audit trail for the occurrence of revenue by aligning shipment evidence with the sales recording, while the other options rely on downstream or less direct evidence and introduce greater risk of undiscovered misstatements.

类似问题

For the following procedure, identify the key assertion being tested. Select a sample of delivery dockets and agree the details to the details recorded in the sales journal.

Which of the following tests is a substantive test that provides evidence in respect of the occurrence assertion?

How did Egyptian culture and governance change during the Ptolemaic period compared to the pharaonic period?

Name the Supreme Court decision that removed financial constraints on PACs.

Political scientists Joshua Kalla and David Broockman find that senior policy makers made themselves available to _____ between three and four times more often than they did to constituents.

Name the political scientist who argues that parties are designed to serve the needs of ambitious politicians (namely candidates and officeholders).

Name the political scientist who said this famous quote about the problems of pluralism: “The flaw in the pluralist heaven is that the heavenly choir sings with a strong upper-class accent.”

What is the name of the third party candidate in 2000 who was not allowed to participate in the presidential debates? Hint: We watched a video clip with him in class.

更多留学生实用工具

智能学习助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单