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Questions and Answers
Which document provides evidence that a customer actually ordered the goods?
Which account is affected by collections on accounts and cash sales?
What typical account is affected by discounts, returns, allowances, and uncollectible accounts provisions and write-offs?
Which class of transaction includes collections on accounts and cash sales?
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What is the purpose of a Sales Order?
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Which document provides externally created evidence that goods have been shipped?
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What is the purpose of a Credit Memo?
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Where are transactions for which a special journal has not been created recorded?
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What is the purpose of the Uncollectible Account Authorization Form?
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What does the Monthly Statement sent to each customer indicate?
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Study Notes
Sales and Accounts
- A Sales Order provides evidence that a customer actually ordered the goods.
- Collections on accounts and cash sales affect the Cash account.
- Discounts, returns, allowances, and uncollectible accounts provisions and write-offs affect the Sales Returns and Allowances account.
- Collections on accounts and cash sales are classified as Cash Receipts transactions.
- The purpose of a Sales Order is to document customer orders and ensure that goods are shipped accordingly.
- A Bill of Lading provides externally created evidence that goods have been shipped.
- A Credit Memo is used to document reductions in sales prices or allowances for damaged goods.
- Transactions for which a special journal has not been created are recorded in the General Journal.
- The Uncollectible Account Authorization Form is used to authorize the write-off of uncollectible accounts.
- The Monthly Statement sent to each customer indicates the customer's current balance and payment history.
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Description
Take this quiz to test your knowledge of the audit of the revenue and collection cycle, including tests of controls and substantive tests of transactions. The quiz covers activities related to the exchange of goods and services with customers, and the collection of revenue in cash. It includes classes of transactions for trading concerns such as sales (cash and credit) and sales adjustments (discounts, returns, allowances, and uncollectible amounts).
