Revenue and Receivables Cycle

Question 1

How is revenue generated?

Answer 1

Revenue is generated through the sale of goods or the delivery of services.

Question 2

The primary purpose of the revenue and receivables cycle is to ensure:

Answer 2

1. That revenue generates from sale of goods or rendering of services is recorded correctly
2. Cash generated from the revenue activities collected and recorded and
3. That all related activities are accounted for correctly

Question 3

What does ISA 315 deal with?

Answer 3

ISA 315 deals with the auditor’s responsibility to gain an understanding of the entity, its environment and internal controls to identify and assess the risk of misstatement in the financial records.