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To test wheth...

Question

To test whether sales have been recorded, the auditor should draw a sample from a file of ________.

A

purchases orders

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B

sales orders

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C

sales invoices

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D

bill of loading

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Solution

The correct option is C sales invoices
It is the auditors responsibility to check all the necessary business transactions. Due to time constraint, sometime it is not possible to verify all the transaction, in such situation auditor adopt the test check method in which a sample of vouchers are examined in depth.
To have a test check on sales, auditor has to draw a sample of sales invoices.

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Q. Goods purchased form creditors have been received but omitted to be recorded in accounts. In such a case, which of the following adjustment entry should be passed?

Purchases A/c Dr.
To Creditors A/c

Creditors A/c Dr.
To Purchases A/c

Trading A/c Dr.
To Creditors A/c

Trading A/c Dr.
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Q. Rectifying the following errors:
(i) Sales Book has been totalled ₹ 1,000 short.
(ii) Goods worth ₹ 1,500 returned by Green & Co. have not been recorded anywhere.
(iii) Goods purchased worth ₹ 2,500 have been posted to the debit of the supplier, Gupta & Co.
(iv) Furniture purchased from Gulab & Co. worth ₹ 10,000 has been entered in Purchases Book.
(v) Cash received from A ₹ 2,500 has not been posted in his account.

Rectify the following errors:

(a)	Credit Sales to Mohan Rs 7,000 were recorded in purchases book.
(b)	Credit Purchases from Rohan Rs 900 were recorded in sales book.
(c)	Goods returned to Rakesh Rs 4,000 were recorded in the sales return book.
(d)	Goods returned from Mahesh Rs 1,000 were recorded in purchases return book.
(e)	Goods returned from Nahesh Rs 2,000 were recorded in purchases book.

Q. Pass journal entries to rectify the following errors detected during preparation of Trial Balance:
(i) Purchases book is undercast by ₹ 1,000.
(ii) Wages paid for construction of office debited to wages account ₹ 20,000.
(iii) A credit sale of goods ₹ 1,200 to Ramesh has been wrongly passed through the purchase book.
(iv) Goods purchased for ₹ 5,000 were posted as ₹ 500 to the purchases account.
(v) An amount of ₹ 2,000 due from Mahesh Chand, which had been written off as a bad debt in a previous year was unexpectedly recovered and has been posted to the personal account of Mahesh Chand.
(vi) A credit purchase of ₹ 1,040 from Ramesh was passed in the books as ₹ 1,400.
(vii) Goods (Cost ₹ 5,000; Sales Price ₹ 6,000) distributed as free samples among prospective customers was not recorded anywhere.
(viii) Goods worth ₹ 1,500 returned by Green and Co. have not been recorded anywhere.

Q. An internal auditor discovered that fictitious purchases have been recorded by the purchase clerk. This indicates absence of which control?

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