Revenue and Expenditure

Refresher Quiz

A coy should check inv. Qtys before accepting a sales order for all the following
reasons except to:

A) update inv records to reduce qty available by no. of items ordered

a. Items are often not picked out until they are picked up by the
warehouse. Reduce the quantity in the books immediately so that
there are no double up orders
B) inform customer about availability and delivery times
C) VERIFY THE ACCURACY OF THE PERPETUAL INVENTORY RECORDS
D) Know which items may need to be back ordered

Checking inventory to see whether there is too much or too little

Separating the shipping and billing fns is deigned to reduce the threat of:
A) shipping the wrong merchandise – no: billing people will not know what
is shipped
B) billing customers before merchandise has been shipped. If the fns were
not separated, this is not a relevant threat
C) failure to bill customers – separating the functions is to avoid the conflict
of interest, bookkeeping vs. handling of physical assets
D) billing customers for wrong quantities – mistake is still being made so not
this answer.

The A/R clerk destroys all invoices for sales made to family and frieds and does
not records the sales in the a/r subsidiary ledgers. Family and friends usually
give the clerk as a thank you.

Which will not prevent/detect this fraud?

Sub ledgers will disappear. The total accounts will remain (main A/R account) so
it will be visible in the A/R control account.

A) Reconcile the A/R control account to the a/r subsidiary ledger - TRUE
B) Reconcile sales invoices in the billing dept to the total debits to A/R
subsidiary ledgers – can see some invoices are disappearing
C) Sequentially prenumber all invoices and prepare a sequence check at the
day end – oen of the strongest preventions
D) Send monthly statements to all customers with balances owed