Question

Whenever a company grants credit to customers, there is a danger that customers will not pay. In fact, most companies have occasional problems with customers who fail to pay which leads to writing off the accounts receivable. Proper controls related to these uncollectible accounts include all of the following, except:

A. Segregation of responsibilities so that no one has the opportunity to write off an account to cover up stolen cash.
B. Thorough guidelines are to be established for determining the amount of an allowance for uncollectible accounts.
C. An accounts receivable aging report should be generated to analyze all customer balances and the lengths of time that have elapsed since the payments were due.
D. Mathematical verification of the cash receipts journal and the accounts receivable ledger

Answer 1

Proper controls related to uncollectible accounts include segregation of responsibilities, establishing guidelines for determining allowance for uncollectible accounts, and generating an accounts receivable aging report.

Step-by-step explanation:

The proper controls related to uncollectible accounts include segregation of responsibilities so that no one has the opportunity to write off an account to cover up stolen cash, establishment of thorough guidelines for determining the amount of an allowance for uncollectible accounts, and generation of an accounts receivable aging report to analyze customer balances and payment delays. However, mathematical verification of the cash receipts journal and the accounts receivable ledger is not specifically mentioned as a proper control.