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

The correct test of controls for transaction assertion of completeness for revenue is to trace shipping documents to sales invoices and the sales journal, confirming that all shipments are properly invoiced and recorded.

Step-by-step explanation:

The question asks which of the provided options is a test of controls for the transaction assertion of completeness for revenue. The correct option is: c. Trace shipping documents to sales invoices and the sales journal. This procedure ensures that all goods shipped are invoiced and recorded in the sales journal, thus testing for completeness in the revenue cycle. While a., b., and d. are relevant to other assertions or components of internal control, they do not directly test for the completeness of recorded revenues.