An auditor is testing sales transactions.One step is to trace a sample of debit entries from the accounts receivable subsidiary ledger back to the supporting sales invoices.What would the auditor intend to establish by this step?
A)All sales invoices have been recorded.
B)Sales invoices represent bona fide sales.
C)Debit entries in the accounts receivable subsidiary ledger are properly supported by sales invoices.
D)All sales invoices have been properly posted to customer accounts.

Question

Quizplus · Accepted Answer

By tracing the debit entries from the accounts receivable subsidiary ledger back to the supporting sales invoices, the auditor intends to establish that the debit entries are properly supported by valid sales invoices. This ensures that the accounts receivable balance is accurate and that there are no unsupported or fictitious entries in the ledger. The auditor is not necessarily seeking to establish that all sales invoices have been recorded or represent bona fide sales, or that all sales invoices have been properly posted to customer accounts.

An Auditor Is Testing Sales Transactions