Select the correct statement from the following.
A)To review purchases from a vendor, inspect the purchases journal; to review payments to a vendor, inspect the cash receipts journal.
B)To review purchases from a vendor and review payments to a vendor, inspect the cash disbursements journal.
C)To review the purchases from a vendor, inspect the purchases journal; to determine inventory levels of a specific item, inspect the subsidiary ledger for inventory.
D)To review the payments to a vendor, inspect the cash receipts journal; to determine inventory levels of a specific item, inspect the inventory journal.

Question

Quizplus · Accepted Answer

The correct statement is that to review purchases from a vendor, one should inspect the purchases journal and to determine inventory levels of a specific item, one should inspect the subsidiary ledger for inventory. Option A is incorrect as it suggests inspecting the cash receipts journal for payments to a vendor. Option B is incorrect as it suggests reviewing both purchases and payments in the cash disbursements journal. Option D is incorrect as it suggests inspecting the cash receipts journal for payments to a vendor and an inventory journal for inventory levels, which is not a commonly used journal.

Select the Correct Statement from the Following