An Entity Uses Internal Control Procedures in Order to Mitigate

question 19

Essay

An entity uses internal control procedures in order to mitigate the risks to which the entity is exposed. Listed below are two internal control procedures which are applicable to an entity's sales and receivables system.
Match each internal control procedure with the risk mitigated from the list below:
-Sales are made to customers who cannot pay
-Sales are not made to existing customers
-Deliveries are not made to bona fide customers
-Customer refuses to pay for goods allegedly not received
-Customer orders not being fulfilled

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Definitions:

Indifference Curve Analysis

A graphical representation used in microeconomics to show combinations of two goods between which a consumer is indifferent in preference.

Equilibrium Point

The state in a market where supply equals demand, leading to stable prices and quantities.

Normal Goods

Goods for which demand increases as the income of the buyer increases, and vice versa.

Price Rises

An increase in the cost of goods or services, often due to factors like inflation, supply and demand imbalances, or production costs.