Question

Which of the following is a test of controls for the transaction assertion of completeness for revenue?

A) Test a sample of sales invoices for authorized customer orders.
B) Review sales orders for proper credit approval.
C) Trace shipping documents to sales invoices and the sales journal.
D) Examine reconciliation of subsidiary ledger to general ledger control account.

Answer 1

Option C) Trace shipping documents to sales invoices and the sales journal is a test of controls for the transaction assertion of completeness for revenue.

Step-by-step explanation:

The test of controls for the transaction assertion of completeness for revenue can be accomplished by option C) Trace shipping documents to sales invoices and the sales journal.

This test involves examining the shipping documents to ensure that all sales are recorded in the sales invoices and sales journal. By tracing the shipping documents to these records, we can verify if all sales transactions have been captured and recorded.

For example, if a company ships products to a customer but forgets to record the sale in the sales invoices and sales journal, this test would help identify the omission and ensure completeness of revenue.