Auditing Chapter 14 Review Questions
Chapter Fourteen Review Questions:
1. Bill of Lading- Is a written contract between the carrier and the seller. It is prepared at the time of shipping goods to a customer. On the Bill of Lading one will find a description of the goods, quantities shipped, and any other relevant data. Once goods have been shipped, the bill of lading generates related sales invoices as well as the entry in the sales journal. An original copy of the bill of lading is sent to the customer while the rest are retained with the seller.
Sales Invoices- Is a document, sometimes electronic, which consists of a description of the goods sold, their quantities, price, freight prices, and other relevant data. And the original copy of the sales invoice is sent to the customer and the others are retained by the seller.
Credit Memo- The credit memo is a document which will indicate a reduction in the amount due from a customer due to returned goods or any allowances given. It reduces the accounts receivable rather than increasing it.
Remittance Advice- Is a document mailed to the customer and returned to the seller at the time of cash payment. It has the customer name, invoice number, and invoice amount.
Monthly Statement to Customer- A monthly statement is a document sent to the customer, mail or electronic form. Consisting of a beginning balance, amount of sales, date of sales, any credit memos issued, payments received and any ending balances.
2. Having proper credit approval for sales will be immensely important as it will help reduce the amount of the allowance for uncollectible accounts. Having adequate controls in place will help the auditor be more assured of the reasonableness of the allowances account, along with the auditors checks of the customer credits for verification.
3. The sales journal is a repot or listing generated from the sales transactions file that typically includes the customer name, date, amount, and account classification for each transaction, states whether
1. Bill of Lading- Is a written contract between the carrier and the seller. It is prepared at the time of shipping goods to a customer. On the Bill of Lading one will find a description of the goods, quantities shipped, and any other relevant data. Once goods have been shipped, the bill of lading generates related sales invoices as well as the entry in the sales journal. An original copy of the bill of lading is sent to the customer while the rest are retained with the seller.
Sales Invoices- Is a document, sometimes electronic, which consists of a description of the goods sold, their quantities, price, freight prices, and other relevant data. And the original copy of the sales invoice is sent to the customer and the others are retained by the seller.
Credit Memo- The credit memo is a document which will indicate a reduction in the amount due from a customer due to returned goods or any allowances given. It reduces the accounts receivable rather than increasing it.
Remittance Advice- Is a document mailed to the customer and returned to the seller at the time of cash payment. It has the customer name, invoice number, and invoice amount.
Monthly Statement to Customer- A monthly statement is a document sent to the customer, mail or electronic form. Consisting of a beginning balance, amount of sales, date of sales, any credit memos issued, payments received and any ending balances.
2. Having proper credit approval for sales will be immensely important as it will help reduce the amount of the allowance for uncollectible accounts. Having adequate controls in place will help the auditor be more assured of the reasonableness of the allowances account, along with the auditors checks of the customer credits for verification.
3. The sales journal is a repot or listing generated from the sales transactions file that typically includes the customer name, date, amount, and account classification for each transaction, states whether