Much of the understanding of revenue transactions for compliance with GAAP can be performed by which of the following procedures?
A)examining sales contracts and inquiry of management.
B)confirming sales with customers.
C)discussing the transactions with qualified members of the Financial Accounting Standards Board.
D)comparing shipping documents with invoices.

Question

Quizplus · Accepted Answer

Examining sales contracts and inquiry of management would provide insight into the terms and conditions of the revenue transactions. This would allow the auditor to ensure that the transactions are recorded in compliance with GAAP. Confirming sales with customers and comparing shipping documents with invoices can provide additional evidence, but they are not sufficient on their own to verify the accuracy of revenue transactions. Discussing transactions with members of the Financial Accounting Standards Board would not provide practical guidance on specific revenue transactions.

Much of the Understanding of Revenue Transactions for Compliance with GAAP