Question

Which of the following is a preventive control? a. credit check before approving a sale on account b. bank reconciliation c. physical inventory count d. comparing the accounts receivable subsidiary ledger to the control account

Answer 1

Answer:

a. credit check before approving

Explanation:

The attempt to prevent from occurrence of an undesirable event is an preventive control e.g segregation of duties, authorization, documentation etc. These control are place before the occurrence of event and these are placed to avoid the event or to prevent from the event. All other examples relates to corrective and detective controls.