Final answer:
Comparing shipping records with the sales journal and invoices aims at minimizing the risk of invalid transactions, helping to ensure all transactions are legitimate and correctly recorded.
Step-by-step explanation:
The comparison of shipping records with the sales journal and invoices is primarily done to minimize the risk of A. Invalid transactions. This process helps to ensure that the transactions recorded in the sales journal have actually been shipped and that they correspond to legitimate sales. By doing this, companies can prevent errors and fraudulent activities such as recording sales that never occurred or shipping goods without recording the transaction. It also safeguards against shipping goods to nonexistent customers or processing transactions that should not be recorded in the financial statements.
To further elaborate, performing this comparison also helps to prevent:
- B. Fictitious customers: Ensuring that the products were shipped to real and valid customers.
- C. Omitted transactions: Making sure that all sales transactions are recorded properly and none are left out which could understate revenue.
- D. Duplicate transactions: Avoiding the error of recording a single transaction more than once, which could overstate revenue.