Final answer:
The best example of a preventive control from the options provided is approving customer credit prior to approving a sales order, as it is designed to prevent financial risk before it occurs.
Step-by-step explanation:
The question is asking for an example of a preventive control, which is a type of internal control designed to prevent errors or fraud before they occur. Out of the options provided:
- Approving customer credit prior to approving a sales order is a preventive control because it helps prevent sales on credit to customers who may not be able to pay.
- Reconciling the bank statement to the cash control account is considered a detective control, as it identifies errors after they have occurred.
- Counting inventory on hand and comparing counts to the perpetual inventory records is also a detective control as it verifies the accuracy of inventory records after transactions have occurred.
- Maintaining frequent backup records to prevent loss of data is a corrective control, as it is focused on restoring operations after data loss has occurred.
Therefore, the correct answer to the question is A) approving customer credit prior to approving a sales order.