An auditor reconciles the total of the accounts receivable subsidiary ledger to the general ledger control account, as at 30 June 2012. By this procedure, the auditor would be most likely to learn of which of the following?
A) An April cheque from a customer was posted in error to the account of another customer with a similar name.
B) An April invoice was improperly computed.
C) An account balance is past due and should be written off.
D) An opening balance in a subsidiary ledger account was improperly carried forward from the previous accounting period.

Question

Quizplus · Accepted Answer

When reconciling the accounts receivable subsidiary ledger to the general ledger control account, the auditor compares the opening balances of each account in the subsidiary ledger to the opening balance in the general ledger control account. If an opening balance in a subsidiary ledger account was improperly carried forward from the previous accounting period, it would result in a discrepancy between the subsidiary ledger total and the general ledger control account total. Therefore, this is the most likely issue that the auditor would discover during the reconciliation process. The other options (A, B, and C) would not necessarily be discovered during the reconciliation process as they relate to specific transactions, rather than overall balances.

An Auditor Reconciles the Total of the Accounts Receivable Subsidiary