Which one of the following internal control procedures would most likely prevent the concealment of a cash shortage resulting from the improper write-off of a trade account receivable? Write-offs must be
A) authorised by company field sales employees who are in a position to determine the financial standing of the customers.
B) approved by a responsible officer after review of credit department recommendations and supporting evidence.
C) supported by an aging schedule showing that only receivables overdue several months have been written off.
D) approved by the cashier who is in a position to know if the receivables have, in fact, been collected.

Question

Quizplus · Accepted Answer

By requiring that write-offs be approved by a responsible officer after review of credit department recommendations and supporting evidence, there is an additional level of oversight and review for any potential cash shortages resulting from improper write-offs. This helps to prevent one individual from having too much control or discretion over write-offs, reducing the risk of fraud or errors going undetected. The other options (A, C, and D) do not address this specific risk as directly or effectively.

Which One of the Following Internal Control Procedures Would Most