Assertions - Sales and receivables Flashcards
Completeness - Sales and receivables
Total subsidiary ledger with A/R G/L.
A/R turnover ratio.
Numerical sequence of sales related documents.
Compare shipping documents with sales invoices and journal entries.
Review periodic accounting for numerical sequence of shipping documents and invoices.
Inspect reports of pre-numbered shipping documents that have not been recorded in sales journal.
Accuracy - Sales and receivables
Management representation letter.
Evaluate reportable operating segments.
Compare G/L balances with fin states.
Valuation/Allocation - Sales and receivables
Age A/R.
Review subsequent cash collections.
Review delinquent customers credit rating.
Assess reasonableness of Allowance for Uncollectible accounts.
Test policy of obtaining credit approval before shipping goods.
Existence - Sales and receivables
Confirm A/R.
Vouch A/R to shipping documents.
Cutoff - Sales and receivables
Shipping documents are traced to accounting.
Test recording of cash receipts and reduction of A/R.
Trace items on the daily remittance list for several days prior to and after year end.
Rights and obligations - Sales and receivables
Inquiries of management if factoring or selling receivables occurred.
Track cash receipts.
Confirm A/R.
Occurrence - Sales and receivables
Vouch sales to customer orders and shipping documents.
Classification / Understandability - Sales and receivables
Inspect income statement and balance sheet.
Evaluate note disclosures to determine accounting policies are disclosed (i.e. A/R presented at NRV)
Pledges of A/R should be disclosed.
