Which of the Following Statements Is True of a Good

question 149

Multiple Choice

Which of the following statements is true of a good merchandise inventory control system?

• A)It minimizes the authorization of purchase of merchandise.
• B)It ensures that a physical count of inventory is not required.
• C)It often prevents the company from a stockout.
• D)It minimizes the authorization of sale of merchandise.

---

Definitions:

Recording Error

A mistake in the bookkeeping process, where transactions are inaccurately recorded, leading to discrepancies in financial records.

Bank Reconciliation

The process of comparing and adjusting the balance shown in an entity's bank statement, with the corresponding amount shown in the entity's own accounting records.

Outstanding Checks

Checks that have been written and recorded by an entity but not yet cleared or cashed by the recipient.

Control Environment

The control environment forms part of an organization’s internal control framework, setting the tone for discipline and structure regarding the internal controls and operational processes.