Which one of the following procedures would ordinarily be expected to BEST reveal unrecorded sales at the balance sheet date?
A) Send accounts receivable confirmation requests.
B) Apply gross profit rates to inventory disposed of during the period.
C) Trace shipping documents to the sales journal.
D) Trace payments received subsequent to the balance sheet date.

Question

Quizplus · Accepted Answer

Tracing shipping documents to the sales journal would reveal any unrecorded sales, as it would identify any shipments that have been made but not yet recorded in the accounting system. This method would be more effective than the other options, as it directly links to the sales journal and identifies specific transactions. Sending accounts receivable confirmation requests may not necessarily reveal unrecorded sales, as customers may have already paid for goods they have received. Applying gross profit rates to inventory disposed of during the period would not necessarily identify unrecorded sales, as there may be other reasons for inventory disposal. Trace payments received subsequent to the balance sheet date would also not be effective, as these payments would be recorded in a subsequent period and not in the current balance sheet.

Which One of the Following Procedures Would Ordinarily Be Expected