Question

A CPA auditing an electric utility wishes to determine whether all customers are being billed. The CPA's best direction of test is from the

a. Meter department records to the billing (sales) register.
b. Billing (sales) register to the meter department records.
c. Accounts receivable ledger to the billing (sales) register.
d. Billing (sales) register to the accounts receivable ledger.

Answer 1

The best audit test direction to verify all customers are being billed is from the meter department records to the billing register, as it cross-checks recorded usage with the issued bills.

Step-by-step explanation:

The student is asking about the direction of testing for a CPA audit to ensure all customers are being billed by an electric utility. The best direction of test to verify the completeness of billing is from the meter department records to the billing (sales) register. Testing in this direction can reveal whether all recorded electricity usage (meter readings) has resulted in a corresponding entry in the billing register, hence ensuring that all customers are being properly billed.