Alpha Company Uses Its Sales Invoices for Posting Perpetual Inventory

question 50

Multiple Choice

Alpha Company uses its sales invoices for posting perpetual inventory records. Inadequate control procedures over the invoicing function allow goods to be invoiced that are not shipped. The inadequate control procedures 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:

Cost of Acquisition

The total expenses incurred when acquiring an asset, including the purchase price and any other costs associated with the acquisition.

Goodwill

An intangible asset that arises when a buyer acquires an existing business and pays more than the fair value of net identifiable assets.

Accumulated Impairment Losses

The total sum of impairment losses that a company has recognized on its assets up to a specific date, reflecting a decrease in the future economic benefits or potential service they can provide.

Regulatory Basis

A set of rules or principles established by government agencies or regulatory bodies that entities must follow.