Alpha Company Uses Its Sales Invoices for Posting Perpetual Inventory

question 56

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:

Typical Corporation

A standard business entity where ownership is divided into shares of stock, offering limited liability to its shareholders and being subject to corporate tax rates.

Disposable Income

Money left for savings and expenditures in households after paying income taxes.

Disposable Income

This refers to the amount of money that households have available for spending and saving after income taxes have been accounted for.

Disposable Income

The total funds available for spending and saving by households after subtracting income taxes.