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The Following Three Questions on an Internal Control Questionnaire Relate

question 108

Essay

The following three questions on an internal control questionnaire relate to comparisons of one amount to a second amount.
Required: What is the purpose of each of these comparisons?
a.Does the company compare budgeted amounts with actual expenditures?
b.Does the company mail monthly statements of account to all customers?
c.Does the company adjust inventory records to physical counts at least once a year?


Definitions:

Direct Materials Budget

An estimation of the raw materials required for production and their anticipated costs, aiding in financial planning and control.

Cash Payments

Cash payments are transactions in which money is transferred from one party to another to settle a debt or purchase goods or services.

Credit Sales

Sales where the customer is allowed to make payment at a later date, extending credit to the buyer.

Cash Received

The physical or electronic receipt of money from transactions, such as sales, debt collections, or asset disposals.

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