Revenue or Sales
When recording or showing your revenues or sales on your Income Statement, make sure that you accounted for:
Make sure there are no fictitious customers
- Make sure your company recorded ALL sales or revenues. Check for overstatement of sales or revenues by vouching and understatement of sales and revenues by tracing. Vouch financial statement amounts back to original source or transaction to make sure your sales are not overstated. Trace your original sources documents transactions all the way to financial statements to make sure that your company sales are not understated, do not try to “even-out” sales , so there is “enough sales equally” for each year. For example, if there is an amount reported in journals, but there is no proof of the sale in supporting documents, where did the company get the client/customer to sell to? How was it paid? Call the “listed” customers and match the records. Do the clients even exist?
- Make sure that your company’s shipping documents match clients/customers billings, to avoid unrecorded Sales and Revenues.
- Completing Sales through banks is more reliable than if you record cash receipts. Remember, sources of your documentation are appropriate (relevant and reliable) if they come from outside, rather than from your company only.
Check that amounts match ledger recording, receipts etc
It is important to record sales and revenues in the year when they occurred.