There is a question related to royalties says:
Describe 3 SUbstantive test you should perform to ensure royalties charge is accurate and complete, stating the objective of each test.
I have mentioned:
Recalculate royalties whether it makes 10% on sales( given in question)which will verify accuracy
Objective- objective is to getting accurate amount of royalties and recording that in accounts.
And for completeness
Inspect some of the invoices of customer and match them with their account to verify completeness.
But none of the point has mentioned in answer sheet.
Ask the Tutor ACCA AA
Substantive test
Please cite the source of your queries - I presume this is the Q Redburn (D09).
Royalties charge is EXPENSE not income. Royalties are paid to the poets (authors).
So this has nothing to do with customers' invoices.
In a version of the answers that I have it says "Take a sample of recorded sales entries and check:
...
that the entry in the computerised royalties file has been calculated at 10% according to the contracts agreed."
So that's an answer point referencing the 10% recalculation.
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