Leaming Objectives 13-2 Describe the business functions and the related documents and records in the sales and collection cycle Processing Customer Orders 1. Customer order. A request for merchandise by a customer 2. Sales order. Goods ordered by a customer Arens, Loebbecke: Auditing, 8/E @2000 Prentice hall.Inc
Arens, Loebbecke; Auditing, 8/E ©2000 Prentice Hall, Inc. 13 - 2 Describe the business functions and the related documents and records in the sales and collection cycle. Processing Customer Orders 1. Customer Order: A request for merchandise by a customer 2. Sales Order: Goods ordered by a customer
FIGURE 13-2 Understand internal control- sales Assess planned control risk- sales Methodology for Evaluate cost Designing Tests of benefit of Controls and testing controls Substantive Tests of Transactions for sales Design tests of Audit procedures controls and substantive tests of Sample size transactions for sales to meet Items to select transaction-related audit objectives Timing Arens, Loebbecke: Auditing, 8/E @2000 Prentice hall.Inc
Arens, Loebbecke; Auditing, 8/E ©2000 Prentice Hall, Inc. FIGURE 13 - 2 Methodology for Designing Tests of Controls and Substantive Tests of Transactions for Sales
GrantinggGredit. 1.Shipping Goods: first point in the cycle the company assets are given up 2. Shipping Document: documents prepared to initiate shipment of the goods, indicating the description of the merchandise, quantity shipped, and other data Arens, Loebbecke: Auditing, 8/E @2000 Prentice hall.Inc
Arens, Loebbecke; Auditing, 8/E ©2000 Prentice Hall, Inc. Granting Credit 1. Shipping Goods: first point in the cycle the company assets are given up. 2. Shipping Document: documents prepared to initiate shipment of the goods, indicating the description of the merchandise, quantity shipped, and other data
Sales invoice Billing Customers an Sales journal Recording sales 1. Sales Invoice 2. Sales journal 3. Summary Sales report 4. Accounts receivable master file 5. Accounts receivable trial balance 6. Monthly statement Arens, Loebbecke; Auditing, 8/E @2000 Prentice hall.Inc
Arens, Loebbecke; Auditing, 8/E ©2000 Prentice Hall, Inc. 1. Sales Invoice 2. Sales Journal 3. Summary Sales Report 4. Accounts Receivable Master File 5. Accounts Receivable Trial Balance 6. Monthly Statement Sales Invoice Sales Journal Billing Customers and Recording Sales