Question

Below are five audit procedures, all of which are tests of transactions associated with the audit of the

sales and collection cycle. Also below are the six general transaction-related audit objectives and the five
management assertions. For each audit procedure, indicate (1) its audit objective, and (2) the management
assertion being tested.
Audit Objectives
A. Occurrence
B. Completeness
C. Accuracy
D. Posting and summarization
E. Classification
F. Timing
Assertions
V. Occurrence
W. Completeness
X. Accuracy
Y. Classification
Z. Cutoff
Vouch recorded sales from the sales journal to the file of bills of lading.
(1) ________.
(2) ________.

Answer 1

The audit procedure of vouching recorded sales to bills of lading tests the audit objective of 'Occurrence' and the management assertion of 'Occurrence', ensuring that recorded sales transactions actually took place. Therefore, the correct option is A.

Step-by-step explanation:

When an auditor vouches recorded sales from the sales journal to the file of bills of lading, they are carrying out an audit procedure that is primarily designed to test for two fundamental aspects - the audit objective and the management assertion related to those transactions. The audit objective in this case is A. Occurrence. This is because the auditor is seeking to confirm that the sales transactions being audited actually took place, or occurred, by comparing them with the shipping documents that provide evidence of the delivery of goods or services. The corresponding management assertion being tested is V. Occurrence. This assertion is that the transactions recorded in the sales journal have truly occurred and are valid transactions reflecting the transfer of goods or services to customers.

Therefore, the appropriate answer would be:

1. Audit Objective: (A) Occurrence
2. Management Assertion: (V) Occurrence