Which of the following internal controls can be applied to the sales/collection process based on the role and purpose of the process?
A)Separation of duties
B)Bank reconciliation
C)Both separation of duties and bank reconciliation
D)Neither separation of duties nor bank reconciliation

Question

Quizplus · Accepted Answer

The sales/collection process involves several steps, including accepting customer orders, invoicing the customers, receiving payments, and depositing cash. To ensure the process's efficiency and effectiveness, it is necessary to implement internal controls. Two essential internal controls in the sales/collection process are separation of duties and bank reconciliation. Separation of duties involves assigning different people to perform different tasks involved in the sales/collection process. For example, the person who accepts customer orders should not have access to the accounting books or be able to get cash received from customers. Bank reconciliation ensures that the cash deposits and bank balances match and eliminates any chances of fraud or errors in the cash management system. By reconciling bank balances to cash deposits, any discrepancies can be identified and explained. Therefore, option C, both separation of duties and bank reconciliation, offers the best internal controls for the sales/collection process.

Which of the Following Internal Controls Can Be Applied to the Sales/collection