An entity erroneously recorded a large purchase twice. Which of the following internal controls would be most likely to detect this error in a timely and efficient manner?
A)Footing the purchases journal.
B)Reconciling vendors' monthly statements with subsidiary payable ledger accounts.
C)Tracing totals from the purchases journal to the ledger accounts.
D)Sending written quarterly confirmations to all vendors.

Question

Quizplus · Accepted Answer

Reconciling vendors' monthly statements with subsidiary payable ledger accounts will identify any discrepancies between the amounts recorded in the ledger and the amount owed to the vendor. If the purchase was recorded twice, the vendor's statement would show a different amount than what is recorded in the ledger. Footing the purchases journal or tracing totals from the purchases journal to the ledger accounts would not detect the duplicate purchase error, while sending written quarterly confirmations to all vendors may not be timely enough to prevent further errors or catch the error before financial statements are issued.

An Entity Erroneously Recorded a Large Purchase Twice