Profit on sale on hire-purchase should be duly calculated on the basis of installment received during the year. 3. Go thoroughly to the purchase invoice or receipt of the machinery. Vouching of Insurance Claims . Purchases Book is meant for recording transactions relating to credit purchases of goods. Payments to creditors Payments to creditors may … The main objectives of vouching of cash transactions are, To ensure that all receipts of cash are duly accounted for. Comparison of current month salary with last month’s salary and if there is any abnormal change in amount, Auditor should verify the same. Insurance premium should not be related to any official of the company. 19. An Auditor should verify that accounting entries are done on the basis of capital and revenue items. 15. For verification of payment, the Auditor can check the payment receipt and the conveyance deed. 2. Cash Sales 3. Verification of bank statement, if the dividend is directly credited to the bank account. Freight inward charges, installation charges, erection and commissioning charges should be capitalized. Like purchase Bill, cash memo, pay-in-slip, etc. 4. To ensure that no improper payments are made. The trade discount received is to be deducted from the purchase invoice and the net amount entered in the purchase invoice should agree with the entry in the Purchases Book. All cash received should be accounted for immediately. If the system of internal check in operation is efficient and effective, he can immediately proceed to vouch the Purchases Book. Comparison of current month wages with last month’s wages and proper verification should be there for extra ordinary changes. The invoice relates to the business, which the concern carries on. All cash receipts should be deposited in bank on a daily basis. Verification of the dividend warrant letter along with the covering letter for verification of dividends in case of dividends received through cheque. Any purchase not meant for the purpose of business of the client should not be debited to the purchases account. If TDS (Tax Deducted at Source) is deducted by the party, there should be proper accounting of TDS. The discount allowed to customers should be properly authorized by a responsible officer. 16. It discloses mistakes and manipulations eg :-Omission or commission of a transaction which may be accidental or incidental . Segregation of principle amount and interest amount should be done and both should separately account for. Correspondence with customer and ledger account should be tallied. 9. Otherwise, the Profit and Loss Account of the current year will not present true and fair position of operating results. Checking of cash purchase: Auditors should check the name of the payees in the cash book against their entries. 13. Cash receipt should be obtained for every cash payment to creditors. If the creditor is paid amount as full and final settlement, the balance amount, if any stands in the ledger account of the creditor; this amount should be credited to discount received. 11. Verification of agreement on the basis of which the commission is received. Cash receipt should be serially numbered. Check for cash receipts signature /acknowledgement of cash recd. When an accounting transaction is vouched, it is tested and verified by presenting relevant documentary evidence. The price mentioned in the purchase invoice should agree with the quotation given by the supplier. Verify entry in Purchase Day Book with respect to date of purchase, invoice number, name of supplier and amount of purchase. Counterfoil of cash receipt should be verified. All received cheques should be crossed immediately on receipt. When the goods are returned, the supplier’s account should be debited. Audit of purchases ledger/Book: After the books of original entries have been vouched and pasting there from fully checked, the following further steps should be taken in connection with the audit the purchases ledger which is also called Sundray creditors ledger or accounts payable ledger. Each voucher should be stamped or initialed after the examination is over, so that it could not be produced again. Vouching of Commission . Vouching of Receipts from hire purchase . If any advance payment is made to creditor that should be clearly mention. Vouching of Cash Sales . 8. Collateral Voucher − Copies of supporting documents which are not available in original are collateral voucher like duplicate or carbon copy of sale invoice. Vouching of cash sales Examine cash book: The auditor should examine the cash book with reference to daily cash sales summary and copies of cash memos. 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