Question

Which of the following control activities may prevent the failure to bill customers for some shipments?

a. Each shipment should be supported by a prenumbered sales invoice that is accounted for.
b. Each sales order should be approved by authorized personnel.
c. Sales journal entries should be reconciled to daily sales summaries.
d. Each sales invoice should be supported by a shipping document.

Answer 1

The most effective control to prevent unbilled shipments is using prenumbered sales invoices matched to each shipment, ensuring systematic tracking and billing.

Step-by-step explanation:

The control activity that may prevent the failure to bill customers for some shipments is that each shipment should be supported by a prenumbered sales invoice that is accounted for. This control ensures that there is a one-to-one correspondence between shipped items and invoices. When each sale is tied to a unique invoice number, it's easier to track whether all shipments have been billed, as missing numbers would indicate unbilled shipments. This method helps to provide a systematic approach to invoicing, thus reducing the chances of oversight or errors in the billing process. Out of the given control activities, option a. Each shipment should be supported by a prenumbered sales invoice that is accounted for would best prevent the failure to bill customers for some shipments.

This control activity ensures that each shipment is accompanied by a sales invoice that is numbered and accounted for. This helps in tracking and reconciling the shipments with the corresponding invoices to ensure accurate billing.

By implementing this control activity, any missing or unaccounted shipments can be identified, reducing the likelihood of failure to bill customers for shipments.