Final answer:
The auditor testing a sample of sales transactions from the sales journal against customer orders and shipping documents is validating the occurrence assertion, which verifies that reported sales actually took place.
Step-by-step explanation:
When a sample of sales transactions recorded in the sales journal is traced back to the customer orders and shipping documents, the auditor is testing the occurrence assertion. This assertion is concerned with whether the sales actually took place and were valid transactions. When auditors perform this type of testing, they are verifying that the transactions recorded actually occured and that there is evidence to substantiate that the goods or services were delivered to customers. This is part of substantive testing procedures that an auditor conducts to provide reasonable assurance that the financial statements are free of material misstatement.
The auditor is testing the occurrence assertion when they trace a sample of sales transactions recorded in the sales journal back to the customer orders and shipping documents.When auditors perform this type of testing, they are verifying that the transactions recorded actually occured and that there is evidence to substantiate that the goods or services were delivered to customers. This is part of substantive testing procedures that an auditor conducts to provide reasonable assurance that the financial statements are free of material misstatement.