Question

Which of the following is consistent with effective internal control over sales transactions?A. The accounting department prepares a shipping report authorizing the shipment of goods.B. The accounting department accounts for all receiving reports.C. The billing department accounts for all shipping documents.D. The accounts payable department annually approves the extension of credit to customers.

Answer 1

Answer:

A. The accounting department prepares a shipping report authorizing the shipment of goods

Explanation:

Internal control over sales is part of the audit procedures for the sales and collection cycle.  Its purpose is to control the entire sales process so that there is no alteration in the related activities or in the documents associated with them. This type of control establishes parameters to disaggregate the tasks in several people, creates verification mechanisms so that the products delivered will be those already registered and controls that the goods or services are only delivered to customers with a good credit score.

According to the above, the response that shows an effective internal control over sales transactions is the A, since it establish a list of products authorized to ship, creating a control over the procedure avoiding errors that may appear.