Which of the following procedures most likely would not be a control designed to reduce the risk of misstatements in the billing process?
A) Comparing control totals for shipping documents with corresponding totals for sales invoices.
B) Using computer programmed controls on the pricing and mathematical accuracy of sales invoices.
C) Matching shipping documents with approved sales orders before invoice preparation.
D) Reconciling the control totals for sales invoices with the accounts receivable subsidiary ledger.
Answer: D
Explanation: The requirement is to identify the procedure that most likely would not be a control designed to reduce the risk of errors in the billing process. Answer (d) is correct because the reconciliation of the control totals for sales invoices with the accounts receivable subsidiary ledger will follow billing; thus billing errors will have already occurred. Answer (a) is incorrect because identification of differences in shipping documents and sales invoices will allow for a correction of any errors and proper billing. Answer (b) is incorrect because computer programmed controls will assure the accuracy of the sales invoice. Answer (c) is incorrect because the matching of shipping documents with the approved sales orders will allow the preparation of a correct invoice.
Which part of the sales transaction cycle is the billing process?
Is it D because the entry is to Accounts Receivable and Sales, so reconciling the total wouldn't actually help with the billing process, which is the process of verifying sales invoice, shipping documents, and ledger, and actually sending the invoice with the inventory?
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