For retailers, the auditor should examine supporting documentation for a sample of sales returns and allowances recorded for several weeks after year end to determine if the allowance for returns and allowances is adequate.

Question

Quizplus · Accepted Answer

The statement is true. The auditor should examine supporting documentation for a sample of sales returns and allowances recorded for several weeks after year end to determine if the allowance for returns and allowances is adequate. This is important to ensure that the financial statements reflect the true amount of net sales, and to prevent overstatement of revenue.

For Retailers, the Auditor Should Examine Supporting Documentation for a Sample