ICAEW ARF · Chapter 5 · Question 4 of 11
Which control best reduces the risk that credit notes are used to conceal the theft of customer receipts?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Credit notes are sequentially numbered and authorised by a manager independent of cash receipts and the receivables ledger
Explanation
An employee who steals receipts might issue fictitious credit notes to clear the customer's balance. Requiring independent authorisation and accounting for the sequence of credit notes makes this more difficult. Posting promptly or filing by customer does not prevent fraudulent credit notes, and allowing the ledger clerk to issue them alone increases the risk.
More Controls over revenue and purchases MCQs
- Q6In a purchases system, which three documents are typically matched before a supplier invoice is approved for payment?
- Q7Which control best ensures that the company records liabilities only for goods it has actually received?
- Q8Which control best reduces the risk of payments being diverted by changing a supplier's bank details?
- Q9At the year end, a company reviews all goods received notes that have not yet been matched to supplier invoices and accrues for them…
- Q10Which of the following controls does NOT help to ensure the completeness of trade payables?