Question

Alpha Company uses its sales invoices for posting perpetual inventory records. Inadequate internal control over the invoicing function allows goods to be shipped that are not invoiced. The inadequate controls could cause an

A. Understatement of revenues, receivables, and inventory.
B. Overstatement of revenues and receivables, and an understatement of inventory.
C. Understatement of revenues and receivables, and an overstatement of inventory.
D. Overstatement of revenues, receivables, and inventory.

Answer 1

C. Understatement of revenues and receivables, and an overstatement of inventory.

Step-by-step explanation:

A deficiency in internal control over financial reporting exists when the structure or activity of a control doesn't permit management or employees, in the typical course of playing out their allocated capacities, to forestall or identify misquotes on a convenient premise.