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How to verify that revenue or sales transactions occurred or exist?

The main risk related to revenue is that the company overstates revenue. Testing for the existence/occurrence of revenue transactions is critical. For most companies, the best test will be to vouch amounts from the general ledger / sales journal back to source documents (invoices, shipping documentation, etc.).

Basically, you would select revenue transactions from the sales journal (which reconciles with revenue in the financial statements) and obtain the invoice and shipping documentation to prove that the good were sent to the customer. The audit team should also verify that the customer paid for the goods.


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