The Receiving Clerk at Folding Squid Technologies Examines Incoming Shipments

question 26

Multiple Choice

The receiving clerk at Folding Squid Technologies examines incoming shipments and reconciles their contents with the relevant purchase orders.A receiving report is then sent to accounts receivable and the vendor's invoice is approved for payment.Which of the following would correct control weaknesses,if any,related to these activities?

• A) The invoice should be approved for payment by the shipping clerk after the purchase order and receiving report are reconciled.
• B) Accounts payable should reconcile the purchase order and the receiving report.
• C) Invoices, purchase orders, and receiving reports should be reconciled by the receiving clerk.
• D) Controls are adequate under the current system.

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Definitions:

Overapplied Overhead

A situation where the allocated overhead cost to products or services exceeds the actual overhead costs incurred.

Underapplied Overhead

A situation where the allocated manufacturing overhead cost is less than the actual overhead incurred.

Direct Labor Costs

Expenses associated with the work directly done by employees on the company's products or services.

Job Order Costing

An accounting system that accumulates costs by individual jobs or orders, suitable for customized or distinct products and services.