Completeness assertion for sales and receivables<\/strong><\/span>
\nReconciling total amounts in subsidiary ledgers with the general ledger
\nPerforming analytical procedures (e.g., comparing accounts receivable turnover with previous year)
\nAccounting for the numerical sequence of sales orders, shipping documents, and invoices
\nTracing from sales invoices to shipping documents<\/p>\n

Accuracy assertion for sales and receivables\u00a0 <\/strong><\/span><\/p>\n

Obtaining management representation letters
\nEvaluating disclosures about reportable operating segments (e.g., geographic areas)
\nComparing general ledger balances with financial statement balances
\nPreparing bank reconciliations<\/p>\n

Valuation and Allocation assertion for sales and receivables\u00a0<\/strong><\/span><\/p>\n

Comparing aged accounts receivables schedule with the prior year\u2019s
\nTracing subsequent cash receipts
\nReviewing delinquent customers\u2019 credit ratings
\nTesting the allowance for credit losses and write-offs<\/p>\n

Existence assertion for sales and receivables\u00a0<\/strong><\/span><\/p>\n

Sending external confirmations
\nVouching journals to shipping documents<\/p>\n

Cutoff assertion for sales and receivables\u00a0 <\/strong><\/span><\/p>\n

Sales cutoff \u2013 Testing whether revenue is recognized in the appropriate period
\n— Tracing shipping documents to accounting records near year end
\nCash receipts cutoff \u2013 Testing the recording of cash receipts and accounts receivable reduction
\n— Tracing daily remittance list to accounting records near year end<\/p>\n

Rights and Obligation assertion for sales and receivables\u00a0<\/strong><\/span><\/p>\n

Inquiring of management (e.g., whether the accounts receivable is pledged and factored)
\nTracing cash receipts to deposits into bank accounts
\nDetermining the right of return, expected returns, and actual returns<\/p>\n

Occurrence assertion for sales and receivables\u00a0<\/strong><\/span><\/p>\n

Vouching samples of recorded sales transactions to customer orders and shipping documents<\/p>\n

Classification and understandability assertion for sales and receivables
\nEvaluating
\n— Classification of
\n–Sales (minus returns and allowances) as revenue
\n— Accounts receivables (minus allowance) as current assets
\nDisclosures of
\n— Accounting policies
\n— Pledges and factoring of accounts receivables
\n— Sales and receivables with related parties<\/p>\n

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