Internal Controls for Handling Sales Returns and Allowances Do Not

question 88

Multiple Choice

Internal controls for handling sales returns and allowances do not include

• A)computing bad debt expense using the percentage of credit sales
• B)verifying that the goods have been returned
• C)authorizing the credit memo by management
• D)using the original sales invoice to prepare the sales returns slip

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Definitions:

Acceptance Sampling Plan

An Acceptance Sampling Plan is a statistical method used to determine whether to accept or reject a batch of products based on a sample, aiming to ensure quality control.

Good Lots

Batches of products that meet quality standards and are deemed acceptable for sale or use.

Bad Lots

Refers to batches of products that fail to meet quality standards or specifications.

Assignable Causes

Specific, identifiable sources of variation in a process, distinguished from random variations.