In designing audit procedures for the sales returns and allowances account, the auditor would primarily rely on the following accounts, except for:
A) sales returns and allowances transaction file.
B) accounts receivable master file.
C) cash receipts journal.
D) sales returns and allowances will be recorded in all of the above.

Question

Quizplus · Accepted Answer

While sales returns and allowances may impact accounts receivable and cash receipts, the primary source of information for auditing this account would be the sales returns and allowances transaction file, which records all transactions related to returns and allowances. The accounts receivable master file would provide some information, but may not capture all returns and allowances. The cash receipts journal would only be relevant if the returns and allowances were processed as refunds to customers.

In Designing Audit Procedures for the Sales Returns and Allowances