Question

7. For each of the tests of controls for sales and receivables, indicate the control assertion by placing the correct letter in the blank.
A. Occurrence
B. Completeness
C. Cutoff
D. Accuracy
E. Classification
___ 1. Scan sales invoices for missing numbers in sequence.
___ 2. Perform arithmetic recalculation of a sample of recorded sales invoices.
___ 3. For a sample of recorded sales invoices from the sales journal, determine whether credit was approved.
___ 4. Trace a sample of credit memos to postings in customers' accounts.
___ 5. Select a sample of customer accounts and vouch debits to supporting sales invoices.

Answer 1

1. B. Completeness

Inorder to make completed statements the business will have to check the whole invoices. The business will scan the sales invoices for missing numbers in the sequence.

2. D. Accuracy

The business will have to recheck or recalculate the sales invoices inorder to ensure the accuracy of records.

3. D. Accuracy

The business will have to check the sales invoices, inorder to ensure whether there is credit was approved regarding the sales. It aims at accuracy of records.

4. B. Completeness

Inorder to ensure the completeness of posting in customer's account the business will have to trace the credit memos.

5. A. Occurence

The business will have to select samples from customer accounts with supporting sales invoices. This is to ensure the occurence.