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Which of the following is an aim of the control system relating to payables and purchases?
A. To ensure that all credit notes received are recorded in the general and payable ledger
B. To ensure that goods and services are only supplied to customers with good credit ratings
C.To ensure that all credit notes that have been issued are recorded in the general and receivables ledgers
D. To ensure that potentially doubtful debts are identified.The correct answer is A.
Question:
1. Which transactions and controls relate to payables/purchases and which to receivables/sales?
2. What should be recorded in the general and payable ledger and what should be in general and receivable ledgers?Payables/purchases:
On receipt of invoice from supplier
Dr Purchases Cr Payables
Need to xheck that the goods were ordered and received.
If goods are returned a credit note should be issued by the supplier
Dr Payables Cr Purchases/ goods returned
Need to ensure all returns receive a credit note.
For sales:
Ensure an invoice is issued for all dispatches then
Dr Receivables Cr Sales
Need to follow up to ensure payment is received
If the customer returns the goods issue a credit note and
Dr Sales Cr Receivables.
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