Audit of trade receivables: which is a procedure?

• A. Cash count at year-end
• B. Agree sales ledger balances to SLCA
• C. Reconcile supplier statements
• D. Inspect tax returns

Answer: (B)

The key idea is verifying the accuracy and completeness of trade receivables by linking the detailed records with the general ledger. The sales ledger lists individual customer balances, and the Sales Ledger Control Account in the general ledger aggregates those totals. Agreeing the balances in the sales ledger to the control account ensures the total of customer balances matches the overall receivables figure, catching posting errors, omissions, or misallocations. This helps confirm that the balance sheet amount for trade receivables is correct and supports further procedures like confirmations and impairment assessments.

Cash counts at year-end relate to cash, not receivables. Reconciliations of supplier statements deal with payables, not receivables. Inspecting tax returns isn’t a standard procedure for verifying receivable balances.