Alpha Company Uses Its Sales Invoices for Posting Perpetual Inventory

question 65

Multiple Choice

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:

• A)understatement of revenues, receivables, and inventory.
• B)overstatement of revenues and receivables and an understatement of inventory.
• C)understatement of revenues and receivables and an overstatement of inventory.
• D)overstatement of revenues, receivables, and inventory.

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Definitions:

Publicly Held Corporations

Companies that have issued securities through an initial public offering (IPO) and are traded on at least one stock exchange or in the over-the-counter market.

Proxy

A person authorized to act on behalf of another, especially in voting at a shareholders' meeting.

Board Meeting

A formal gathering of the board of directors of an organization, company, or corporation to discuss and decide on company policy and management issues.

Liable

Being legally responsible or obligated.