Which of the following controls will most likely prevent the concealment of a ca

Question

Which of the following controls will most likely prevent the concealment of a cash shortage resulting from the improper write-off of a trade account receivable? A. Write-offs must be approved by a responsible officer after review of credit department recommendations and supporting evidence. B. Write-offs must be authorized by company field sales employees who are in a position to determine the financial standing of the customers. C. Write-offs must be supported by an aging schedule showing that only receivables overdue several months have been written off. D. Write-offs must be approved by the cashier who is in a position to know if the receivables have, in fact, been collected.

Explanation / Answer

A. Write-offs must be approved by a responsible officer after review of credit department recommendations and supporting evidence.

The above control will ensure that any existing cash shortage is not written off against a trade account receivable(which is not actually going to result in bad debt in near future). As in the given case first there would be a check done by department and the decision would be suggested on the basis of supporting evidence and then the same would be reviewed and approved by an officer.

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.