ACCA Audit and Assurance (F8) Practice Exam

In auditing, tracing a sample of shipping documentation to invoices can help ensure:

1. The completeness of sales

2. The accuracy of receivable balances

3. The authorization of sales transactions

4. The validity of customer accounts

The correct answer is: The completeness of sales

Tracing a sample of shipping documentation to invoices is an essential auditing procedure that helps to confirm the completeness of sales. By following the trail from shipping documents, which indicate that goods have actually been shipped to customers, to the corresponding invoices, auditors can verify that all shipped goods have been recorded as sales in the accounting records. This procedure ensures that every transaction that was initiated by shipping goods is also reflected in the financial statements as revenue. Thus, it helps to identify any sales that may have occurred but have not been recorded, ensuring that the financial statements provide a complete view of the company's sales activity. The other options relate to different aspects of the auditing process. For example, accuracy of receivable balances involves ensuring that the amounts owed by customers are correctly recorded, while authorization of sales transactions pertains to verifying that sales have been approved according to company policy. Validity of customer accounts focuses on ensuring that the customers listed in the accounts receivable ledger actually exist and are legitimate. Each of these areas is important, but tracing shipping documentation to invoices specifically addresses completeness in sales, which is crucial for accurate financial reporting.