Question

You are testing the Accounts Receivable balance of $2,550,000.

You select a sample of $100,000 to test and after your testing, you conclude that the sample balance should be $98,500. What are your likely and known misstatements?

Answer 1

After checking the sample of $100,000 from account receivable balance and concluding that the sample balance should be $98,500, my likely and known mistatement would be aritimetic mistake in calculating the despatch quantity or selling price which might be updated wrongly during recording of receivables in books. Also there is possibility that credit note issued is not recorded correctly or missed to record during correct time period. Also, payment received from customer is not recorded in customer account as it might still showing in bank reconciliation as reconciling items.