20 Which of the following Credit authorization a relationships does not violate
ID: 2405476 • Letter: 2
Question
20 Which of the following Credit authorization a relationships does not violate the rules of segregation of duties? preparation of the sales order D. Preparing goods for shipment and accounting for inventory C. Entering sales in the sales journal and handling the inventory O. Preparation of the sales order and sales invoice E Approve the sales invoice and credit check sales invoice rder and 21 Common type except s of independent checks within the revenue process include all of the following A. Verification of information in the sales journal and on sales invoices. B. Reconciliation of accounts receivable detail with invoices and with the general ledger C. Reconciliation of inventory records with actual (counted) quantities on hand D. Verification of the bank statement and the cash account in the general journal. E. None of the above receiving a returned product and checking its condition, all of the following options are available to a company except A. Resell the product B. Repair the product C. Record bad debt expense on the product D. Dispose of the product E. Both C and D 23. The main purpose of an audit is to assure users of the financial information about the A. Effectiveness of the internal controls of the company B. Selection of the proper GAAP when preparing financial statements C. Proper application of GAAS during the examination D. Accuracy and completeness of the information E. All of above 24. Goods received are unacceptable due to may different situations. Which of the following is not one of those situations? A. Damage or defects B. Errors in the type of goods delivered or ordered C. Changes in the company needs regarding future sales or production D. Timing issues E. More than one choice is correct 25. Internal controls related to the purchase returns would include all of the following, except: A. Special authorization should be required to officially reject and return the items.Explanation / Answer
20. The answer is A. Credit Authorization and preparation of Sales Order. This Both tasks are done by the Credit Department of the Company.
21. The answer is D. Verification of the bank statement and the cash account in the general ledger is not an independent check of Revenue Process.
22. The answer is E. For Product Returned company cant record Bad Debts as it has no Receivable pending for the said Sales. Also, Company will not dispose of the Product unless it is required, they will resell it or repair it and resell it if minor damages are found.
23. The answer is E. The main Purpose of Audit is to ensure user regarding all the available options.
24. The answer is C. Changes in the companies need regarding Future sales and production is not a reason to reject the product. Timing issues can't be considered an unacceptable reason because many times normal variation in time is allowed, it is general business practice. However, if the company has strict policies it can reject goods based on timing issues also.
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