The PCAOB's AS No

question 32

Multiple Choice

The PCAOB's AS No.5 states that internal controls may be preventive or detective. Which of the following controls is preventive?

• A)Requiring two persons to open mail containing payments.
• B)Reconciling the accounts receivable subsidiary file with the control account.
• C)Using batch totals.
• D)Preparing bank reconciliations.

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Definitions:

Sales

The total amount of goods or services sold by a company, also a critical indicator of a company's performance and market demand.

Cost of Goods Sold

Cost of Goods Sold is the total of all expenses directly related to the manufacturing or purchasing of products that a company sells during a period.

Days in Receivables

Days in Receivables, often referred to as Days Sales Outstanding (DSO), measures the average number of days it takes a company to collect payment after a sale has been made.

Accounts Receivable

This term refers to the money that is owed to a company by its customers for goods or services that have been delivered but not yet paid for.