BUS 426 Lecture Notes - Lecture 7: Sierra Entertainment, General Ledger, Credit Manager

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 426
• Professor: Michael Favere- Marchesi

Document Summary

Sales are initiated by customer order shipping document + invoice follow sale, recorded both in a text file (sale) + summary in customer master file (for a/r) Sales journal posts to the a/r subsidiary ledger: a/r subsidiary ledger is used to produce an aged a/r trial balance. Major problem of online systems: early recognition of revenues. Controls over recognition of revenues need to be assessed. Consequently, there will be increased testing required of the assertions that affect revenue recognition. Prior to auditing individual transaction cycles, the auditor documents pervasive general controls that affect multiple transaction cycles. If the general controls are good, auditor may rely upon and test interdependent or fully automated controls. Key control: credit is approved before shipment takes places. Sales manager initiates all sales order > (occurrence) Possible toc: examine samples of sales orders to determine if sales manager"s initials appear.