Some Countries Allow Inter-Affiliate Transactions to Be Settled Only on a Gross

question 9

Multiple Choice

Some countries allow inter-affiliate transactions to be settled only on a gross basis.That is,

• A)all receipts for a settlement period must be grouped into a single large receipt and all disbursements must be grouped into a single large payment.
• B)all receipts and disbursements for a settlement period must be handled individually.
• C)all receipts and disbursements for a settlement period must be netted against each other and then a single large payment is made.
• D)each affiliate nets all its inter-affiliate receipts against all its disbursements.It then transfers or receives the balance,respectively,if it is a net payer or receiver.

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Definitions:

Cash Payments Journal

A financial journal that records all cash outflows or payments made by a business, including expenses and asset purchases.

Purchases Journal

A record keeping document used to note all credit purchases of inventory and other items made by a company.

Establishment of Responsibility

An internal control principle focusing on assigning specific responsibilities to particular employees to reduce errors and fraud.

Segregation of Duties

An internal control measure where no single individual is given too much responsibility in areas of financial reporting, transaction processing, or asset management to prevent fraud and errors.