Audit Chapter 14

Front 1

objective in the audit of the sales and collection cycle

Back 1

to evaluate whether the account balances affected by the cycle are fairly presented in accordance with accounting standards.

Front 2

transaction in the sales and collection cycle

Back 2

1.sales. 2. cash receipts 3.sales returns and allowance. 4 write-off uncollectibl accounts 5. estimate of bad debt expense.

Front 3

business functions for sales and collection cycle

Back 3

1. processing customer orders. 2. granting credits. 3 shipping goods. 4. billing customers and recording sales 5. processing and recording cash receipts. 6. processing and recording sales returns and allowance. 7. writing off uncollectible accounts receivable. 8.providing for bad debts

Front 4

understand the internal controls

Back 4

study the client's flowcharts, make inquiries of the client using n internal control questionnaire, and perform walkthrough tests of sales.

Front 5

TOC and TOT

Back 5

Phase 1: understand internal control --- assess planned control risk.---determine extent of testing controls. phase 2: design tests of controls and substantive tests of transactions to meet transaction-related audit objective. audit procedures, sample size, item to select, timing.

Front 6

Assess planned control risk

Back 6

adequate充足的separation of duties

proper authorization

adequate document and records

Front 7

the extent of testing of controls

Back 7

depends on the effectiveness of the controls and the extent to which the auditor believes they can be relied on to reduce control risk

Front 8

occurrence

Back 8

recorded sales are fore shipment actually made.

Front 9

completeness

Back 9

existing sales transaction are recorded

Front 10

accuracy

Back 10

recorded sales are for the amount of goods shipped and are correctly billed and recorded

Front 11

classification

Back 11

sales transactions are correctly cassified

Front 12

timing

Back 12

sales are recorded on the correct dates

Front 13

direction of tests

Back 13

completeness: shipping doc -- duplicate sales invoice -- sales journal

occurrence: sales journal --duplicate sales invoice, shipping documents, customer order.

Front 14

accurate

Back 14

compare prices o duplicate sales invoices with an approved price list

customer orders and sales order.

Front 15

lapping of accounts receivable

Back 15

postponement of entries for the collection of receivables to conceal an existing cash shortage.