ACCA Audit and Assurance (F8) Practice Exam

What is a major factor to consider for the accuracy of sales and receivables?

1. Sales forecasts

2. Control account reconciliation

3. Supplier contracts

4. Customer feedback

The correct answer is: Control account reconciliation

The accuracy of sales and receivables is significantly impacted by control account reconciliation. This process ensures that the totals in the sales ledger (accounts receivable) match the total in the general ledger control account. By reconciling these accounts, discrepancies can be identified and resolved, thereby enhancing the reliability of the financial statements. It is essential for auditors to verify that the amounts recorded in the sales and receivables accounts match with the underlying documentation, such as invoices and payment records. This practice helps prevent errors such as missing sales, misrecorded receipts, or unrecorded adjustments, all of which can distort the financial position of the company. In contrast, sales forecasts, while important for strategic planning and resource allocation, do not directly impact the recorded amounts in the financial statements. Supplier contracts are related to purchases and expenses rather than sales and receivables, making them less relevant to this specific aspect. Customer feedback might provide insights into market trends and customer satisfaction, but it does not contribute directly to the accuracy of the sales and receivables figures on the financial reports. Therefore, effective control account reconciliation stands out as a critical factor for ensuring accuracy in this area.