In performing your audit you noticed that often times goods are shipped that are not matched with the corresponding sales invoice. This control deficiency could cause:
A) understatement of revenues and overstatement of inventory.
B) overstatement of revenues and understatement of inventory.
C) understatement of revenues and inventory.
D) overstatement of revenues and inventory.

Question

Quizplus · Accepted Answer

If goods are shipped without a corresponding sales invoice, the revenue from those goods is not recorded, leading to an understatement of revenues. Additionally, since the goods have left inventory but are not recorded as sold, inventory is overstated.

In Performing Your Audit You Noticed That Often Times Goods