Internal Controls Related to the Purchase Returns Would Include All

question 64

Multiple Choice

Internal controls related to the purchase returns would include all of the following, except:

• A)The accounts payable employee who prepares the debit memo should also be responsible for handling the inventory and approving the return.
• B)Special authorization should be required to officially reject and return the items.
• C)Debit memos should be issued on pre-numbered forms in numerical sequence.
• D)Accounts payable records and data files should be restricted to those who are specifically authorized to approve or record the related purchase return.

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Definitions:

Drawer

The person who writes or issues a bill of exchange, cheque, or draft, instructing a drawee to pay a specified sum to a payee.

Transfer Warranties

Legal assurances provided by a seller to a buyer regarding the condition and legal status of property or goods being sold.

Presentment Warranties

Guarantees made by the presenter of an instrument (e.g., a check) regarding their authority and the validity of the instrument in a financial transaction.

Acceptor

A person (drawee) who accepts and signs a draft to agree to pay the draft when it is presented.