To Ensure That All Credit Sales Transactions of an Entity

question 64

Multiple Choice

To ensure that all credit sales transactions of an entity are recorded, which of the following controls would be most effective?

• A)On a monthly basis, the accounting department supervisor reconciles the accounts receivable subsidiary ledger to the accounts receivable control account.
• B)The supervisor of the accounting department investigates any account balance differences reported by customers.
• C)The supervisor of the billing department sends copies of approved sales orders to the credit department for comparison of authorized credit limits and current customer balances
• D)The supervisor of the billing department matches prenumbered shipping documents with entries recorded in the sale journal.

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Definitions:

Manufacturing Overhead Budget

A financial plan that estimates the expected indirect production costs, excluding direct materials and direct labor.

Activity Base

A measure or statistic that is used as the basis for allocating costs in activity-based costing.

Overapplied Factory Overhead

The condition where the allocated factory overhead costs exceed the actual factory overhead expenses.

Predetermined Overhead Rate

A calculated rate used to allocate manufacturing overhead costs to individual units of production, typically based on estimated costs and activity levels.