Which of the following is a weak internal control over cash collections from receivables?
A) The credit department should have no access to cash.
B) A credit department should evaluate customers' credit applications to determine whether they meet the company's approval standards.
C) A company should have written approval standards for processing customers' credit applications.
D) In order to avoid losing sales, all customers' credit applications should be approved.

Question

Quizplus · Accepted Answer

Allowing all customers' credit applications to be approved in order to avoid losing sales is a weak internal control over cash collections from receivables. This can result in granting credit to individuals or companies who are not creditworthy and may have difficulties paying back their debts, leading to higher risk of bad debts and potential losses for the company. A strong internal control would involve evaluating customers' credit applications based on set approval standards and not approving those who do not meet the criteria.

Which of the Following Is a Weak Internal Control Over