While vouching, how will the auditor ensure himself that all credit sales transactions have been recorded by the entity?

Examining cutoff points

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Matching entries in the sales book against renumbered sales invoices and goods outward notes

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Counting the number of invoices and matching the number with entries on sales book

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Both A and B

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Solution

The correct option is D Both A and B
All credit sales are recorded in sales day book. While doing the credit sales, goods outward note is prepared along with the sales invoice. Material issue department has to ensure that only goods is moved from the stock yard which is mentioned in the outward note and invoice.

Hence Auditor has to verify the following while doing credit sales vouching:
1) Outward notes
2) Sales Invoice which are to be serially numbered
3) Cut off point from where the goods is moved out

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Similar questions

Is it correct to say that sales book is a record prepared from invoices issued to customers?

Rectify the following errors by passing entries:

(i) Credit sale of old furniture to Mohan for 1,500 was posted as 5,100.

(ii) Goods purchased from David Rs.2,000 passed through sales book.

(iii) Sales Book has been totaled Rs.2,000 short.

The following selected transactions were given by the Adams Company:
Sept.16: Sold merchandise on account to the Foster Company, sales invoice no. 1032, Rs 3,742.
Sep 20: Sold merchandise on account to the King Company, sales invoice no. 1033, Rs 8,950.
Sep 25: Sold merchandise on account to Zimmer Company, sales invoice no. 1034, Rs 173.
Sep 27: King Company returned Rs 982 of merchandise relating to sales invoice no. 1033;
What shall be the total of sales book as at 30th Sep?

Q. Give rectifying entries for the following:
(i) A credit sales of goods to Ram ₹ 2,500 has been wrongly passed through the 'Purchases Book'.
(ii) A credit purchase of goods from Shyam amounting to ₹ 1,000 has been wrongly passed through the 'Sales Book'.
(iii) A return of goods worth ₹ 1,100 to Mohan was passed through the 'Sales Return Book'.
(iv) A return of goods worth ₹ 500 by Ganesh were entered in 'Purchases Return Book'.

Pass the necessary journal entries to rectify the following errors

(i) Credit sale of Rs. 1,700 to Raj was recorded as sales to Aryan.

(ii) Credit sale of old machinery to Sohan for Rs. 1,700 was entered in the sales book for Rs. 7,100.

(iii) Credit sales to Mohan Rs. 7,000 were not recorded.

(iv) Credit purchase from Rohan Rs. 9,000 were not recorded.

(v) Goods returned to Rakesh Rs. 4,000 were not recorded.

(vi) Goods returned from Mahesh Rs. 1,000 were not recorded.

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