A Furniture Company Ordered 84 Tables from a Supplier

question 44

Multiple Choice

A furniture company ordered 84 tables from a supplier. The supplier accidentally sent only 48 tables, but the receiving department at the furniture company accepted the tables. The invoice was eventually received but was for the 84 tables ordered. The furniture company paid the entire amount. Which of the following controls would have been least likely to have prevented this erroneous payment?

• A)The copy of the purchase order sent to the furniture company's receiving department should not have shown an expected quantity.
• B)Personnel in the furniture company's accounts payable department should compare the receiving report to the purchase invoice before creation of the voucher.
• C)Personnel in the furniture company's cash disbursements department should compare the check that is prepared to all of the backup documentation.
• D)Personnel in the furniture company's purchasing department should compare the purchase requisition to the purchase order.

Learn how to calculate the accounts receivable period.

Understand how inventory management and turnover rates impact the operating cycle.

Determine the impact of changes in inventory, receivables, and payables periods on the operating and cash cycles.

Compute the accounts payable period and its significance in liquidity management.

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Definitions:

Cross-Over Point

The point where two different plans, strategies, or costs meet and produce the same outcome or value.

Variable Cost

Expenses that fluctuate in relation to the volume of output or business activity. A reiteration that emphasizes the dependency on production levels.

Outsource Production

The practice of delegating production or manufacturing processes to external firms, often to reduce costs or access specialized skills.

Fixed Costs

Costs that do not change with the amount of goods or services produced or sold, such as rent, salaries, or insurance.