Question

Alpha Company uses its sales invoices for posting perpetual inventory records. Inadequate control activities over the invoicing function allow goods to be invoiced that are not shipped. The inadequate control activities could cause an Group of answer choices Understatement of revenues, receivables, and inventory. Overstatement of revenues and receivables and an understatement of inventory. Understatement of revenues and receivables and an overstatement of inventory. Overstatement of revenues, receivables, and inventory.

Answer 1

Answer:

Overstatement of revenues and receivables and an understatement of inventory.

Explanation:

Invoicing in different occasions could be done for the case of inventory and reference purposes in the hands of both the salesman and buyer. Therefore on the case above, inadequate control could possibly cause overstatement of revenues and receivables and an understatement of inventory. It is also been observed that the sales invoice provides the seller with a record of what has been sold, whether the said transaction has been carried out or not and how much money is involved. This information is useful for internal company records and also to follow up with buyers for billing purposes.