Receivables

The risk of one of cut-off error - that goods go out (i.e. not in inventory so increases cost of sales) but there is no corresponding revenue/receivable. It's not enough to check that there is a sales invoice because that's not enough to know whether it's been recorded. If included in the sales ledger, the sale (and hence the receivable) will have been recorded.

Thanks. A receivables balance is recorded in the clients book as $2885 Dr but the customer reply to the confirmation is $2635 is owed by him, Options 1.The customer had paid $ 250 on the last day of accounting period 2.The clients record are inaccurate 3.An invoice of $250 has been sent t o the customer by posy 4.the amount of $250 invoice has been raised the day after the accounting period. Option 4 is correct , why not option 1 and 3?

the question for above query is: Which of the following is not account for the discrepancy?

Sorry, one more question about receivables: Tracing shipping documents, is it completeness or existence?

The question was which could NOT account for discrepancy? So 1, 2 & 3 could all be reasons why the balance is $250 more in the client's books than in the customer's books. 4 could not account for the discrepancy because $250 would not have been recorded in the client's books at the y/e date. See the chapter financial statement assertions revisited - completeness is relevant to both classes of transactions and account balances - but only an asset/liability (account balance) is held out to exist (at the reporting date. Tracing any transaction from its source to ensure its inclusion in the financial statements is a test of completeness.