In the audit of the revenue of Hiram Manufacturing Company,the auditors obtain a number of shipping documents shortly before year-end and immediately following the year under audit.The auditors compare the documents to the sales journal in order to test which of the following?
A)existence of sales.
B)presentation and disclosure of receivables.
C)cutoff of sales transactions.
D)completeness of receivables.

Question

Quizplus · Accepted Answer

By comparing the shipping documents to the sales journal, the auditors are testing the cutoff of sales transactions, which ensures that the revenue is recorded in the correct accounting period. This testing helps to establish whether sales recorded at year-end actually occurred in the same year or in the subsequent period.

In the Audit of the Revenue of Hiram Manufacturing Company,the