Question

For a firm that practices good internal controls in the sales and collections cycle, the function of indicating credit approval should be recorded on which of the following documents?

A) sales order
B) sales invoice
C) customer order
D) remittance advice

Answer 1

In a firm with good internal controls, credit approval is indicated on the sales order. It is a preventive measure against unauthorized transactions and helps maintain separation of duties.

Step-by-step explanation:

In a firm that practices good internal controls within the sales and collections cycle, the function of indicating credit approval should be documented on the sales order. This ensures a separation of duties and helps to prevent unauthorized transactions. The sales order is the initial document that signals the agreement between the customer and company, marking a good point to verify and record credit approval before the sales process continues.