Chapter 11 - Statement Of Profit And Loss

Question 1

Revenue testing

Answer 1

Sample orders from customers and agree to GDN and sales invoices to ensure included in sales ledger.
Sample of GDN before and after y/e to ensure included in right period - cut off test.
Recalculate sales tax to ensure accuracy.
Anal review comparing years; actual to budgets and gross profit margins.

Question 2

Payroll, purchases and other expenses

Answer 2

Agree payroll records to the nominal ledger.
Recalculate net pay and deductions for a sample of employees.
Agree net pay to the cash book.
Cut off test for the purchase invoices.
Analytical review: comparing figures for payroll and purchases then investigating any significant fluctuations.
Compare ratios such as net profit margins.