Question

Tracing bills of lading to sales invoices provides evidence that:

1) Shipments to customers were properly authorized.
2) Recorded sales were shipped.
3) Billed sales were shipped.
4) Shipments to customers were billed.

Answer 1

Tracing bills of lading to sales invoices is a process used to verify that shipments to customers were properly authorized and billed, ensuring the integrity of financial records within a company.

Step-by-step explanation:

Tracing bills of lading to sales invoices provides evidence that shipments to customers were billed. This practice ensures that the shipping process aligns with the recorded sales, ultimately verifying the accuracy and completeness of the sales and shipping records. By matching up these documents, businesses confirm that:

• Recorded sales have a corresponding shipping document, which means goods that were sold were indeed shipped.
• Goods shipped to customers were properly authorized and an appropriate bill of lading was created.
• The shipments correspond to billed sales, confirming that the goods sent out were invoiced.

This auditing process is necessary for maintaining accurate financial records, ensuring proper revenue recognition, and upholding effective internal controls within a company.