A Credit Sale Is Made to a Customer,even Though the Customer's

question 72

Essay

A credit sale is made to a customer,even though the customer's account is four months overdue.Describe a specific internal control procedure that would prevent this from happening.

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Definitions:

Liability

A financial obligation or debt owed by an individual or company.

Accrual

The accounting method that records revenues and expenses when they are incurred, regardless of when cash transactions occur.

Onerous Contracts

Contracts in which the unavoidable costs of meeting the obligations exceed the economic benefits expected to be received under it.

Accruals

Accounting method that records revenues and expenses when they are earned or incurred, regardless of when cash transactions occur, reflecting the economic activity more accurately.