The control an entity should have in place in order to ensure all credit sales have proper credit approval is
A) an approved sales order for all goods released to dispatch.
B) a check on customer's credit limit prior to each sale and a credit department credit check on all new customers.
C) determination that customer is on an approved customer list.
D) both a and c

Question

Quizplus · Accepted Answer

Option B includes both necessary controls to ensure proper credit approval for credit sales, which are checking the customer's credit limit and conducting a credit check on all new customers through the credit department. Option A only ensures that there is an approved sales order, but it cannot guarantee proper credit approval. Option C only checks if the customer is on an approved list, but it does not confirm whether the customer has proper credit approval. Therefore, the best choice is B.

The Control an Entity Should Have in Place in Order