Why are audit trails for the purchasing process somewhat more complicated than those for the revenue process?
A) The revenue process involves the revenue recognition principle.
B) The purchasing process usually includes only a single journal entry and, therefore, provides inadequate support.
C) The purchasing process may involve two journal entries often made at difference times.
D) The revenue process is vulnerable to errors when posting from the cash receipts journal.

Question

Quizplus · Accepted Answer

The purchasing process often involves two journal entries, one for the initial purchase and another for the payment. This makes the audit trail more complicated compared to the revenue process, which typically involves only one journal entry (for example, when recording sales revenue). The revenue recognition principle is not directly related to the complexity of audit trails in the purchasing process. The number of journal entries in the purchasing process is typically sufficient to provide support, although it may require additional effort to reconcile and track the movements of inventory and expenses. The vulnerability to errors when posting from the cash receipts journal is more of a concern in the revenue process, but it does not necessarily make it more complex to audit compared to the purchasing process.

Why Are Audit Trails for the Purchasing Process Somewhat More