Question

At Ajax Company, goods billed by suppliers are compared to purchase orders and receiving reports before being paid. Which internal control procedure does this reflect?

a. Restrict access
b. Independent verification
c. Document procedures
d. Segregate duties
e. Establish responsibility

Answer 1

The practice of comparing goods billed to purchase orders and receiving reports at Ajax Company reflects the internal control procedure of independent verification.

Step-by-step explanation:

At Ajax Company, the comparison of goods billed by suppliers to purchase orders and receiving reports before the payments are made reflects the internal control procedure of independent verification. This practice is part of a set of accounting controls designed to ensure the reliability and accuracy of the financial records and safeguard assets. Independent verification involves reviewing transactions and activities to ensure compliance with company policies and accuracy before final processing. It provides an extra layer of security by having an unbiased party check the accuracy of transactions.